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People use Options in order to mitigate their losses, and when that's traded algorithmically, it's called algorithmic option trading. Technically, algorithmic option trading follows an ultimate set of predefined instructions to take specific positions, however unlike the fully automated method, it's more perceptive to rapidly changing market situations. When an investor opens a position, he's not actually purchasing the product; instead, he's speculating on how it might perform over time. This type of Trading is executed in stock exchanges, commodities, indices, currencies and a variety of other financial instruments. But how is an algorithmic trading defined? Backtesting is a technique for effectively analyzing and testing Algorithmic Options trading strategies. A backrest is defined as an application, or tool, that allows for the testing of backtesting strategies in real time using historical data. As an example, a trader may run a backtest in which he places a single trade on an

Algorithm options trading, also known as option trading, is a highly specialized form of stock trading where stock investors and traders place their bets on the direction of the underlying asset. Algorithmic trading strategies are usually made up of various models that help investors in making a calculated decision on the buying or selling of stocks on a specific date. These strategies work in such a way that they predict the movement of underlying assets in the market and consequently, they provide a precise amount of income or loss to an investor. A wide number of investors, banks and large financial institutions make use of this form of stock trading. Identifies Trading Opportunities An Algorithm is essentially the computer program that makes the analytical decisions for you on where to invest. It identifies trading opportunities; places buy and sells orders on your behalf and executes transactions on your behalf accordingly.