What is systematic trading?
It’s a method of trading using automated computer systems and frameworks, which streamlines processes and reduces the likelihood that a trade may be missed due to human error. Systematic trading is mainly based on technical analysis of market data.
Key takeaways
Systematic trading is a method that uses automated computer systems and frameworks to execute trades based on technical analysis of market data, streamlining processes and reducing human error.
Investment banks and hedge funds are the primary users of systematic trading due to the large volume of daily transactions, and it includes both algorithmic trading and passive index tracking.
Systematic trading enables investors to make methodical investment decisions by setting predetermined trade goals and risk controls, with many systems automatically placing trades with brokers.
A key benefit of systematic trading is removing emotion from decision-making and risk-taking, which can often hamper investors, unlike discretionary trading where traders rely on personal judgment.
Where have you heard about systematic trading?
Systematic trading is most widely used by investment banks and hedge funds due to the large amount of transactions made every day. It includes both algorithmic trading and passive index tracking.
What you need to know about systematic trading.
Systematic trading is primarily used to make investment and trading decisions in a methodical way, allowing investors to set trade goals and risk controls. Many trading systems can automatically place trades with a broker.
One of the main benefits of systematic trading is that it takes the emotion out of decision-making and risk-taking, which can often hamstring investors. The alternative to systematic trading is known as discretionary trading, which is where traders rely on their own judgement about where the market is headed.