Timed trading is a kind of trading in which an asset, share or other financial market instrument is bought and sold at predetermined prices for a short time. This way, traders take advantage of the daily variation in price.
Time is money. This adage rings more accurate than ever in today’s high tech trading world. Financial institutions and private traders alike are constantly looking for ways to make the most of every second. There has been a recent influx of trading techniques that emphasize speed as much as accuracy.
What is timed trading?
The basic principle behind timed trading is simple: buy low and sell high – ideally at precisely the right time to take advantage of minute market changes. When engaged in this type of high-frequency trading (HFT), traders will use specialized software to scan their designated market in real-time for specific criteria, such as stock price volatility in the case of equity markets. When this criterion is met, the program signals an automatic trade that’s executed almost instantly, taking advantage of minute price changes to generate a profit.
Is timed trading viable?
While there is little data on its long-term effectiveness over traditional strategies, some HFT firms have experienced incredible gains employing timed trading techniques. Getco LLC (now KCG Holdings) saw its annual revenue skyrocket tenfold between 2005 and 2009 when it used timed trades to make more than $100 million per year. Similarly, Trading Machines LLC increased its annual income by over 20 times between 2007 and 2009 after employing timed trading strategies.
This sharp increase in profitability is because, over time, all traded assets are affected by random ‘market noise’, which can cause them to behave erratically for a tiny period. Timed trading analyzes this market noise to generate high volumes of trades within short periods – generally only a few seconds long.
As more traders began using this strategy, it became apparent that all assets with substantial volume generated some sort of market noise consistently. This means that profitable opportunities could be identified and exploited at any given moment, given the right program and enough capital.
Benefits of timed trading
One of the significant benefits of timed trading is that you will never have to wait long for your money to grow. With most investments, you would have to wait months or even years for your money to become worth much. But with timed trading, if you bought $20 each month over 20 months, it would be worth $64 by the end (based on investment with 5% interest per year). That’s just as good as an investment with a one year return time.
Timed trading can reduce risk in some cases. A common problem for people who don’t invest regularly is that they use up their monthly budget for expenses before they have enough money saved up for investments too. So if something unexpected happens and they need $30, for example, they either have to go without or dip into their investment fund. When you invest more often, you have a better chance of not going over your monthly budget.
Timed trading can help improve your credit score. Some credit rating systems measure how often you pay bills on time, and most people would be unable to buy an investment with no credit history because of this reason. But with timed trading, the monthly payments will look just like any other bill, so there won’t be an issue making these regular payments on time which could give you a better credit rating over time.
Timed trading lets you automatically decide how much money to invest to save a lot of time and decision making.
Overall, timed trading seems like a great idea and is definitely worth giving a try. As long as you keep track of your accounts, then no risk could be caused by this type of investing, and it can improve your investment experience without taking up too much time. For more advice on timed trading, visit https://www.home.saxo/en-sg/products/futures.