The Financial Markets all operate based on Supply and Demand of the goods in those market; Stocks, Bonds, Forex, etc. One may look at the ‘Chaos’ surrounding these markets and decide that there is absolutely no viable trend to speak of when it comes to the market actions. The idea that there is some order to be found in market dynamics is impossible.

Well, this is not entirely true.

Yes, there are fundamental items that come into play that will cause movements in the markets that may not be predictable or otherwise foreseen. However, there are still ways for us to look for patterns in in pricing and at the macro level looking for the familiar “Sine Curve” to locate support and resistance. And at that point, Human and Computer work together.

A third of all EU and US stock trades in 2006 were driven by automatic programs, or algorithms, according to Boston-based consulting firm Aite Group LLC. By 2010, that figure will reach 50 percent, according to Aite.^[2]

In 2006 at the London Stock Exchange, over 40% of all orders were entered by algo traders, with 60% predicted for 2007. American markets and equity markets generally have a higher proportion of algo trades than other markets, and estimates for 2008 range as high as an 80% proportion in some markets. Foreign exchange markets have active algo trading (about 25% of orders in 2006).^[3]

The issue with Algo trading is in the unforeseen increase in volatility that may cause the perfectly systematic order processing to go wrong - or right, but in a losing position. Many times, algo trading platforms will get caught in a fast moving market that ‘messes’ with their data input mechanism. This is a major problem with automated trading applications, that operate in that manner.

These types of trading applications require tighter operational guidelines, and closer scrutiny by a human observer, who can choose to ’shut off’ the trading program and decide to keep out of the market during such times.

Our goalis to offer a safe and effective means to develop, deploy and host Expert Advisors for our clients. We take into account the growing need for automated trading systems for the Retail Market, and its lag behind more mainstream development (Operating Systems, Personal Media, etc). By offering a service that will allow speculators in this market, easy access to the means to build and support their own personal Trading application, we hope to see continued growth in the opportunity that exists in this particular method of investment.

Expert Advisors have been proven to be effective; However it is never recommended to allow a pre-programmed application to have complete say over one’s investments. The only way that automated trading programs can survive and grow, is when on-going human interventions are present in the process. Upgrades, Updates, New Implementations and Quality Assurance + Testing; are all necessary actions that must never have any end in sight. But most importantly, there will be times where the chaos that surrounds the Financial Markets, spins out of control, taking with it the logical and methodical processes a mechanical trading application lives by.

It is the understanding of these types of events, that is completely lacking in software, but can be supplemented by human intervention.

eTechnologic is the subsidiary of Gallant FX (an NFA recognized CTA firm), and Gallant Partners (a Web development and Internet Strategies group). Two diverse, yet focused organizations with emphasis on Technology and the Financial Markets.

With our background and understanding, we are able to help with all aspects of the technology behind our services; as well as providing Trading Advisory when needed.