Introduction to Algorithmic Trading
By Daniel Chau
Founder, NeuroBacktest
Discover what algorithmic trading is, why traders use it, and how to design, backtest, and deploy your first algo strategy.
Algorithmic trading uses computer programs to execute trades based on predefined rules. It replaces discretionary decision-making with a repeatable, testable process.
Why Traders Use Algorithms
- Speed: Algorithms can monitor dozens of markets and execute in milliseconds.
- Discipline: Rules remove emotional reactions to wins and losses.
- Scalability: A profitable system can be run across many assets simultaneously.
The Algo Development Workflow
A typical workflow is: idea → hypothesis → backtest → optimization → paper trade → live deployment → monitoring. Skipping any step, especially rigorous backtesting, is a common cause of failure.
Start Without Coding
With NeuroBacktest, you can describe an idea in plain English: "Create a momentum strategy that buys SPY when the 20-day EMA crosses above the 50-day EMA and holds until the cross reverses." The platform builds and backtests the algorithm for you.
Frequently Asked Questions
What is algorithmic trading?▼
Algorithmic trading uses computer programs to execute trades based on predefined rules. It removes emotional decision-making and can monitor many markets simultaneously.
Do I need to be a programmer to algo trade?▼
Not anymore. Platforms like NeuroBacktest let you describe strategies in natural language and automatically generate, backtest, and run the algorithm.
What makes a good algo trading strategy?▼
A good strategy has a clear edge, robust out-of-sample performance, reasonable drawdowns, and rules that can be executed automatically without ambiguity.