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Algorithmic Trading: Winning Strategies And Their Rationale

Algorithmic trading is a method of trading where a software program is given pre-defined instructions of strategies (through computer algorithms). Once these conditions (which were predefined in the program) are met, the algorithmic trading software executes buy or sell orders automatically on your behalf (if the auto-pilot mode is turned on).


Suppose, the software is given encoded instructions to:


  • Buy bitcoin BTC when the 50 DMA moves over the 200 DMA (which means when Golden Cross happens, giving a bullish signal).


  • Sell bitcoin BTC when the 50 DMA moves below the 200 DMA (which means when Death Cross happens, giving a bearish signal).


If the algorithmic trading bot is put on autopilot then it will buy and sell bitcoin automatically on the basis of the pre-defined instructions given to it. This will help a trader to make a profit without having to monitor BTC price charts or other technical factors. Therefore, a trader can make passive income even when he/she is sleeping by putting the algorithmic trading bot on autopilot. 


The reason why this software is becoming so popular among traders is the fact that they are able to make passive income automatically by setting the strategies of trade and putting it on autopilot. In fact, this software is widely used by investment banks, hedge funds, pension funds, and mutual funds. These bots have been found highly effective in trading crypto and forex pairs trading. 


However, it also needs special mention that algo trading bots are also used by many traders to get trading signals only. They execute the orders themselves. Manual trading by getting buying and selling signals from the bots is usually done by the pro and experienced traders and investors. 


When automated trading (also called quantitative trading or quant trading) is initiated, trades are executed by the bot without any human emotion and way faster. That’s why these trading robots are used for highfrequency trading HFT on trading platforms.


You should not consider these bots as get-rich-quick software programs. In fact, losing money is also part of this game of money-making. Always keep in mind that these algo trading robots make use of financial data feeds, technical analysis, and fundamental analysis to get signals for trading, and on the basis of quantitative finance they make profits. 

What are the Algorithmic Trading Winning Strategies and Their Rationale?

When there is a trading strategy, it is dependent on identifying opportunities for making profitable trades. This improves earning, on one hand, and reduces cost, on the other. Cost reduction helps in increasing profits of traders. There are many trading models and trading programs that can help you make lots of money. Here are some of the most effective algorithmic trading strategies and trading system designs for successful trades and continued passive income:

Strategy #1: Trend-Following Strategies

Moving averages (MAs), price level movements, channel breakouts, and related technical indicators provide trends of price movement. As these strategies are not based on any kind of price predictions, they are easy to implement in automated algo trading. 


As per the trend following strategies, initiation of trades takes place on the basis of the occurrence of desirable trends. The example of the golden cross and death cross at the beginning of this article involving 50 days moving average and 200 days moving average is a popular trend-following strategy. The easy and fast strategy implementation helps traders to get more profit even when they are not monitoring charts actively.

Strategy #2: Arbitrage Opportunities

Suppose, a stock is listed in two exchanges. However, it is a general phenomenon that the prices in both exchanges vary at any given time. To make a risk-free profit, you buy the stock from the exchange where the price is lower and simultaneously sell it at an exchange where the price is higher. This strategy is called the arbitrage strategy and can be applied in stocks, futures, cryptocurrencies, and many other digital assets. Using them for day trade has been found highly effective. 


As the price differential of an asset on different exchanges tends to converge quickly, automated algorithmic trading is found to be most effective because they simultaneously execute buy and sell orders in different exchanges way faster than human traders.

Strategy #3: Index Fund Rebalancing

Index funds rebalance their holding to make it at par with their respective benchmark indices on a regular interval. When they do that, the algorithmic traders get opportunities for profitable trades. During these times of index fund rebalancing, traders can get profits of 20-to-80 basis points. How much profit you can get will depend on the number of stocks in the index fund just before the rebalancing of the index fund. 


As these trades should be executed very fast to get maximum profit, it is not always possible by human traders. This is where the effectiveness of automated trading systems comes to play. These automated trading bots execute trades at the best prices so that you can make maximum profit. 


Besides these 3 winning strategies through algorithmic trading, there are many other strategies that can help you make huge profits. Some of them are:


  1. Mathematical Model-based Strategies
  2. Trading Range (Mean Reversion)
  3. Volume-weighted Average Price (VWAP)
  4. Time Weighted Average Price (TWAP)
  5. Percentage of Volume (POV)
  6. Implementation Shortfall
  7. Beyond the Usual Trading Algorithms


No matter what the strategy is, you should not become totally passive. Always keep an eye on the algo bot, market conditions, transaction costs, recent price moves, past performances, types of trading that are highly profitable, different stock exchanges, swing trading, and other factors. 

Choose NapBots to Increase ROI

Trading Robots (such as NapBots.com) automatically scans the market in real-time and trades for you. They run 24/7, which means that you can keep earning your passive income even when you are sleeping. This gives you an edge over other investors as it enables the bot to book profits on your behalf when other investors are sleeping.


Smart crypto investors always remain prepared to get the best of a big market move. They don’t wake up suddenly. To remain alert round the clock, they use cryptocurrency trading bots so that they don’t miss any big market movement.


NapBots.com is a Trading Bot, cloud-based platform, on which you can connect to major exchanges such as Binance, Bitmex, Bitfinex, OKEX, Kraken, Bitstamp, and Bitpanda. 


The best thing about the Napbots trading software is that you don’t have to monitor charts and candles to predict your next move. Any novice trader with zero skills can also start trading like a pro and earn money with this unique trading tool. Let Napbots take full control over your trades in just a few clicks. Now, sit back and enjoy earning money. 


You may also check “Napbots Review - Simple Way To Increase Your Crypto Returns” before taking the plunge.

What’s so special about NapBots?

NapBots crypto trading software is special because it comes with:

  1. A unique trading algorithm that processes market data for you 
  2. A unique crypto trading bot library so that you can create your own mix of trading strategies
  3. Autopilot mode that enables you to automate trading 24x7
  4. An easy-to-use interface so that you can copy the proven strategies of NapBots to make successful trades and make money

How to Get Started with NapBots?

NapBots is easy to start with. It involves just 3 steps:


Step #1: Connect to one of the available trust exchanges.

Step #2: Select from the unique list of performing Bots of NapBots

Step #3: Choose a plan that suits your investment style


Once you have completed these three steps, NapBots is ready to trade cryptos and earn money for you. Happy Trading!

Why Choose NapBots?

  • NapBots offers complete trading automation solutions through the use of its own tested trading strategies; offering quantitative trading strategies previously reserved for hedge funds to the public. 


  • The setup and installation process are easy. So, the non-experts can also use it. The simple and special approach of NapBots helps it provide you with excellent ROI. 


  • The team of professionals behind NapBots has extensive experience in the financial market. They have put their years of experience in place so that you can easily automate the management of your funds with no technical skills. This service can run 24/7 and work as your passive source of revenue even when you sleep.