Computers and technology have transformed the way we interact with different products and services, and financial markets are no different. Whether banks, funds, or institutions, investors work hard to incorporate advances in technology within their strategies to build a quantifiable trading edge in financial markets. Of the most successful methodologies pioneered, algorithmic trading stands out from the rest due to its focus on automation.
Algorithmic trading is basically a form of trading strategy automation for those unfamiliar with the terminology. Effectively, it represents a program that automatically executes buy and sell orders in financial markets when certain predefined conditions are satisfied, like price, volume, or other characteristics. Because their high-speed analytical abilities, fast execution, and automation remove the component of human emotion, these algorithmic solutions help eliminate fear and greed from the decision-making process.
Although algorithmic trading strategies and tools were formerly only available to high-frequency trading firms, hedge funds, and other sophisticated investors, over time, they have gradually evolved to become more suitable for retail traders and investors. At present, multiple solutions are available to help users navigate financial markets, and among them, here are the top four solutions and their capabilities worth keeping tabs on moving forward.
A newcomer that recently arrived in the decentralized finance (DeFi) market is HyperDEX, a multifaceted digital asset management platform that offers passive opportunities for traders and investors with limited time to navigate various DeFi markets. HyperDEX offers a decentralized and automated solution through the platform’s “cube” finance instruments, which grant investors multiple choices in terms of investing. Based on a CertiK audited smart contract system, algo-trading Cubes work on a statistical arbitrage model that features fully-automated trade execution to identify and capture pricing discrepancies across cryptocurrencies.
HyperDEX takes great pains to ensure that its products keep up with changing market conditions, and accomplishes this feat with an assessment system that routinely adapts the algorithm to these ever-evolving cryptocurrency markets automatically. The algo-trading Cubes follow a fairly traditional fee structure involving a 2% annual management fee and 20% of positive performance. A working beta application is already live, with plans in the pipeline to unveil new market cubes later this year.
Another strong automation suite in the decentralized finance arena comes by way of Yearn.Finance, an ecosystem of DeFi protocols with a range of functionalities designed to facilitate more passive returns for investors. Ultimately, Yearn helps users allocate their funds across different DeFi platforms by deploying money robots to harness the returns available from activities like lending, liquidity provision, trading, or a combination of strategies.
By simply providing tokens to the platform, Yearn’s protocol automatically manages user funds, leveraging the power of robotic algorithm trading to execute complex strategies designed to deliver high returns for low risk. Fee-based money robots constantly scour markets for opportunities, automating the entirety of the process from end to end. One of the best features of Yearn is the community’s participation, which helps spark innovation and uncover new strategies to conquer unfolding DeFi opportunities.
Although primarily an institutional-focused tool, AlgoTrader is a leading algorithmic trading solutions provider in traditional financial markets and digital asset markets. Through market-wide connectivity across multiple venues, exchanges, and liquidity pools, AlgoTrader works hard to ensure that client orders are automatically executed at the best possible rates with its sophisticated execution and portfolio management tools.
The AlgoTrader QUANT tool delivers automated trade execution after signal generation. Clients can construct their own quantitative strategies in multiple development languages, connect to different data sources to support trading signal output, backtest strategies to validate algorithmic models, optimize strategies over time, and execute them automatically with minimal slippage with advanced Smart Order Routing.
Leveraging a deep-tech approach to algorithm construction, EndoTech has been providing algorithmic trading services for the cryptocurrency market since 2018. One of the unique attributes of EndoTech’s model is that they support client-side custody of funds. This means that trading occurs directly within client accounts instead of clients sending funds to an external portfolio management service.
Clients with accounts at applicable exchange venues simply connect strategies via API, which automatically scour markets for opportunities before executing trades according to predetermined rules constantly adjusted to reflect changing market conditions. EndoTech currently supports over 20 strategies, including alpha, beta, and leveraged trading strategies in major coins. In the future, the firm plans also to roll out strategies designed to support automated trade execution in traditional asset markets.
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