Technology is altering everything from how we drive our cars to how we interact with business and even the form of currency we use – so it's no surprise to see it increasingly affect the way trades are made in the stock market.
As traders constantly seek to get that vital edge in the market, attention is turning more and more to the continually evolving and ever more prevalent tool at their disposal: algorithmic trading.
A European investment firm has commissioned a bespoke algorithm from Samuel Leach, Founder and Director of Samuel & Co Trading, a specialist in Trading and Algorithm design, for a 7 figure sum.Sources close to the deal confirm that the contract was completed and delivered in early November 2021.
Through the use of computer programming, algorithmic trading can carry out orders in the market automatically by working to a predefined set of rules. Not only does it automate much of the process, but it is also capable of carrying out tremendous numbers of orders at speeds impossible for the human trader to conduct themselves.
It's a technology that is faster (higher frequency), better (more accurate), calmer (no fear, greed or anger blinding decisions) and will continue to trade while its user is sleeping.
And while the technology can help avoid human failings like emotional influences on activity, it also eliminates a tremendous amount of risk by allowing users to test their strategy before actually committing to a trade.
It also affords the potential to exploit opportunities that a human trader cannot detect, through its use of high-frequency trading and ability to hone in on price differentials too brief for a human to spot.
Samuel Leach's personal trading style, developed whilst at university and working at one of London's leading private banks, is aligned with the strengths of 'Algo' trading. Samuel uses his YouTube and Instagram profiles to demonstrate the strengths of his algorithm software. This earned him the status of 7th Top Fintech Disruptor in the UK, and was recognised as one of Yahoo Finance's Top Traders To Follow in 2020.
Traders are increasingly adopting these algorithmic-based approaches and making use of automation to handle volatile products and cash settlement periods.
As for how increasingly – in the early 2000s, algorithmic trading accounted for around 15 per cent of the US's stock market volume. It now accounts for 80 per cent of that same market.
Elsewhere, there is much room for growth in the market – with India, for example, currently making comparatively less use of the technology, with it accounting for 40 per cent of the country's trading volume.
A July report from Allied Market Research pegged the value of the global algorithmic trading market at $12.14bn in 2020 – with a projection that it would reach $31.49bn by 2028, a compound annual growth rate of 12.7% from 2021 to 2028.
In the more short-term, the B2B research and consultancy firm MarketsandMarkets put the market size at $18.8bn by 2024.
Some of the largest names in the sector, such as JP Morgan, have developed their own flagship models – with algorithms now accounting for 20 per cent of the bank's total futures trading – while others, such as Citi, have developed entire suites.
Samuel Leach, whilst still only 30 years old, has navigated his firm into a position as a recognised algorithm development outfit that can compete in this highly competitive market and where demand is only going to increase as the technology emerges.