Practical algorithmic trading — (1) Why algo trading and technical indicators?

Chris Kuo/Dr. Dataman
17 min readJul 22, 2023

Everyday there are millions of data analysts, data scientists, data engineers, or quants who analyze various financial factors for their investment decisions. Algorithmic trading, the use of computer algorithms to automate the process of buying and selling financial securities in the markets, is the major channel of investment in today’s economy. In this “practical algorithmic trading” series, I will introduce free Python tools including visualization, technical indicators, backtesting, and evaluation metrics.

Algorithmic trading is also called algo trading or automated trading. The algorithms are pre-researched rules that instruct when and how trades are executed based on various market data and conditions. These algorithms are viewed as the secret source of profitable trades. Algorithmic trading involves extensive data analysis for price movements, trading volume, technical indicators, and fundamental data.

Trading around the world

The world stock markets operate in all the time zones unceasingly. Let’s travel around the world to see the major stock exchanges. Our flight starts with the Wellington Stock Exchange in New Zealand (GMT+13), then the Sydney Stock Exchange in Australia (GMT+11), then the Tokyo Stock Exchange in Japan (GMT+9), then the Shanghai Stock…