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Algorithmic Trading Strategy Making: Algorithms and Applications

Copyright © 2012. 18 pages.
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DOI: 10.4018/978-1-61350-162-7.ch004
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MLA

Deng, Xiaotie, Feng Wang and Keren Dong. "Algorithmic Trading Strategy Making: Algorithms and Applications." Information Systems for Global Financial Markets: Emerging Developments and Effects. IGI Global, 2012. 55-72. Web. 30 Aug. 2014. doi:10.4018/978-1-61350-162-7.ch004

APA

Deng, X., Wang, F., & Dong, K. (2012). Algorithmic Trading Strategy Making: Algorithms and Applications. In A. Yap (Ed.), Information Systems for Global Financial Markets: Emerging Developments and Effects (pp. 55-72). Hershey, PA: Business Science Reference. doi:10.4018/978-1-61350-162-7.ch004

Chicago

Deng, Xiaotie, Feng Wang and Keren Dong. "Algorithmic Trading Strategy Making: Algorithms and Applications." In Information Systems for Global Financial Markets: Emerging Developments and Effects, ed. Alexander Y. Yap, 55-72 (2012), accessed August 30, 2014. doi:10.4018/978-1-61350-162-7.ch004

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Abstract

Algorithmic trading strategy making is a very important research issue which attracts more and more people’s interests. This chapter will introduce several principal algorithms for algorithmic trading strategy making. How to design a trading strategy will also be discussed. Some latest research achievements on the algorithmic trading strategy making will be given with some examples and application results.
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Arbitrage Strategy

Arbitrage is an activity which traders or investors take advantage of the disequilibrium existed in the financial market to benefit themselves. It widely exists in the modern financial economy. The existence of the disequilibrium implies that the market goes against the law of one price, and as a matter of fact, arbitrage is a process which arbitragers make use of these opportunities and make the market move to equilibrium. The disequilibrium of financial market has many types of arbitrage. The exchange arbitrage involves the simultaneous purchase and sale of a currency in different foreign exchange markets. Arbitrage becomes profitable whenever the price of a currency in one market differs from that in another market. In order to keep the equilibrium of the exchange rate trading market, arbitrage is not available or taken as a close position.

In this section, we will discuss three kinds of arbitrage in the current market. One is the exchange arbitrage based on covered interest parity. The second one is statistical arbitrage. The third one is information arbitrage.

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Complete Chapter List

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Table of Contents
Preface
Alexander Y. Yap
Chapter 1
Donald Crooks, John Slayton, John Burbridge
Much has been written about information technology and its role in reinventing financial markets. Today’s markets are truly global, and the... Sample PDF
Information Technology and Financial Markets: Risk, Volatility and the Quants
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Chapter 2
Alexander Y. Yap
Trading anytime anywhere ubiquitously is rapidly becoming a popular trading practice in the financial marketspace. When highly volatile financial... Sample PDF
Trading Anytime Anywhere with Ubiquitous Financial Information Systems
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Chapter 3
Michael Kampouridis, Shu-Heng Chen, Edward Tsang
In a previous work, inspired by observations made in many agent-based financial models, we formulated and presented the Market Fraction Hypothesis... Sample PDF
The Market Fraction Hypothesis under Different Genetic Programming Algorithms
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Chapter 4
Xiaotie Deng, Feng Wang, Keren Dong
Algorithmic trading strategy making is a very important research issue which attracts more and more people’s interests. This chapter will introduce... Sample PDF
Algorithmic Trading Strategy Making: Algorithms and Applications
$37.50
Chapter 5
Alexander Y. Yap, Wonhi Synn
This chapter focuses on the theme of service innovation in the electronic brokerage sector. The discussion will cover the theories of “technology... Sample PDF
Technology Bundling: Innovation for Online Brokerage Services
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Chapter 6
Robert P. Schumaker, Hsinchun Chen
However, using computational approaches to predict stock prices using financial data is not unique. In recent years, interest has increased in... Sample PDF
Predicting Stock Price Movement from Financial News Articles
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Chapter 7
Joe Kelley
Virtual reality offers the promise that finally, most of the capabilities of the human mind and senses can be harnessed to improve global financial... Sample PDF
Virtual Reality Support for Trading
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Chapter 8
M. Kersch, G. Schmidt
Trading decisions in financial markets can be supported by the use of trading algorithms. To evaluate trading algorithms and to generate orders to... Sample PDF
Survey of Trading Systems for Individual Investors
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Chapter 9
Joe Kelley
We sketch a large-scale computable general equilibrium model of the macroeconomy that includes modern features such as financial derivatives. This... Sample PDF
Grid Super-Computable General Equilibrium Models
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Chapter 10
Seán O’Riain, Andreas Harth, Edward Curry
With increased dependence on efficient use and inclusion of diverse corporate and Web based data sources for business information analysis... Sample PDF
Linked Data Driven Information Systems as an Enabler for Integrating Financial Data
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Chapter 11
Roger F.A. van Daalen
The move towards electronic trading was believed by some to narrow the scope of information available to traders, due to the difference between the... Sample PDF
The Persisting Human Element of the Electronic Trading Habit
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Chapter 12
Joe Kelley
We present an extensive dynamic financial model that encompasses most models used today in finance and economics. We show that this model is a good... Sample PDF
DSP Acceleration for Dynamic Financial Models
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Chapter 13
Joe Kelley
We propose to use FPGA (Field Programmable Gate Arrays) to solve the nearly insurmountable computational challenges of Financial Network Models.... Sample PDF
FPGA Speedup for Financial Network Models
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Chapter 14
Alma Lilia Garcia Almanza, Serafín Martínez Jaramillo, Biliana Alexandrova-Kabadjova, Edward Tsang
The main advantage of creating understandable rules is that users are able to interpret and identify the events that may trigger bankruptcy. By... Sample PDF
Using Genetic Programming Systems as Early Warning to Prevent Bank Failure
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