Lucrative profits and financial freedom have made algorithmic trading an excellent career option for many. Unlike manual trading, algorithmic trading can generate profits quicker and beyond human limits through the use of a computer program that follows a set of defined instructions when placing trades.
For beginners, here is a step-by-step guide on the essential skill sets required to become an algorithmic trader the right way.
Step 1: Mastering the Core Areas of Algorithmic Trading
The most important step on how to become an algorithmic trader is to master the basic areas that build up algorithmic trading.
Algorithmic trading is a combination of several disciplinary fields that primarily focus on three domains, namely:
- Quantitative Analysis
Thinking quantitatively is the way to successfully partake in algorithmic trading. Problem-solving skills and statistical analysis are some of the skills that need to be developed or honed.
Investing in good quantitative trading books can help beginners to build an essential foundation of quantitative analysis in trading the right way.
- Programming Skills
Learning some programming skills can give traders a grip in the technology-driven world of automated trading. Traders with sound knowledge of programming languages including Python, C++, Java, or R have an edge in the trading firms.
- Trading Skills
Learn the basics of algorithmic trading and the various algorithmic trading strategies such as the trend-following strategy, arbitrage strategy, and the mean reversion strategy can increase profits and minimize the loss in trading.
Free trading courses can be accessed in many online teaching platforms, including Udemy and Udacity, which allows beginners to test the waters without paying a dime.
Step 2: Becoming a Professional Algorithmic Trader (Algo-Trader)
Mastering the core areas of algorithmic trading is not enough. To become an algorithmic trader, you will need a solid algorithmic trading foundation.
Here are some simple ways on how to become algorithmic trader expert and nail the fundamentals of algorithmic trading.
- Read algorithmic trading books
Algorithmic trading books are great resources to start learning the basics. Find some good algorithmic trading books that cover different topics written by credible authors.
- Read online through various blogs and websites
Following various blogs on algorithmic trading is another great way to learn the ins and outs of algorithmic trading and get updated on the latest news of algorithmic trading. Additionally, some algorithmic trading courses can also be accessed on YouTube for free.
- Take local or online courses from experts
Aside from attending local algorithmic courses, beginners can enroll in various online webinars and online learning portals that offer both free and paid courses taught by professional Algorithmic traders, including Udemy, Udacity, edX, and Open Intro.
Step 3: Get Hired in an Algorithmic Trading Firm
Working in a trading firm can help give proper exposure to the real markets and develop connections with other experts of algorithmic trading.
Nailing the proper steps to become a full-fledged algorithmic trader may take a lot of hard work, time, and persistence, but it will pay off at the end of the day.