4. Algorithmic Trading
It is extremely difficult to incorporate this trading strategy, as it requires a significant amount of individual research and time! To automate your trades, you have to build up the infrastructure, research mathematically proven strategies, backtest your trades for profitability, etc. Many people who use this type of trade have extreme levels of education and usually have a Master’s or Ph.D. degree.
In order to reduce risk, algorithmic trading uses statistical and mathematical methods to ensure profitable trades based on mispricing or market arbitration opportunities.
What’s unique about this type of proprietary trading method is that instead of speculating if your trade will make money, you’re using historical data to increase your future trades’ success.