What is Algorithmic trading?
Algorithmic trading is placing orders by pre-written rules that a computer follows exactly, instead of by a person deciding each trade by hand.
What does Algorithmic trading mean in practice?
The defining feature is that the rules exist in advance and are applied without improvisation. An algorithm might say: enter when price closes above the previous day's high, risk a fixed amount, exit at a target or a stop. The computer does not get tired, hesitate, or talk itself out of a rule after a losing streak.
That consistency is also the main risk. An algorithm will follow a flawed rule perfectly, at speed, for as long as it runs. Algorithmic trading is not a way to find an edge. It is a way to apply a rule you already believe in, which makes testing the rule before using it the most important step.
A worked example
Illustrative only: a rule reads 'buy when the 20-period average crosses above the 50-period average, risk 1% of capital, stop 2% below entry'. A person might skip the third signal in a row because the last two failed. The algorithm takes all three, which is the rule's real behaviour, good or bad.
How to read or test it
Before automating anything, write the rule as one unambiguous sentence covering entry, exit, size and what happens when it is wrong. If you cannot, the rule is not ready to be a program. Then test it on history, then on live prices with virtual money, and only then decide whether any real money is involved at all. Each step answers a different question, and skipping one leaves that question unanswered rather than resolved.
How AKQX handles Algorithmic trading
AKQX is software for building such rules from visual blocks, backtesting them, and paper trading them on live prices. It gives no advice about which rules to use, and real execution exists only for crypto through your own exchange account.
See No-code algo strategy builder for the feature page.
A common mistake
Assuming automation improves a strategy. It only removes hesitation. A rule with no edge loses money faster when it is automated.
Educational only. This entry explains a term. It is not investment advice and does not recommend any trade, setting or strategy, and example numbers are illustrative, not results.
Related terms
Test the idea instead of taking it on trust
A free account includes 10 backtests a month and 1 paper algo, with no card and no broker connection.