Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (2024)

Algorithmic trading (or Algo trading) involves using automated systems for order execution through pre-programmed trade directives to account for variables like prices, time, and volume. The main reason for using algorithmic trading is leveraging computer systems, resources, and speed, and not humans for trade in a predefined market. As a result, trading generates profits at a faster rate and frequency, which would otherwise be unattainable by a human trader.

Why Is Algo Trading Is Important Even For Retail Traders?

Algorithmic trading accounts for roughly 60-75 percent of regular trading volume (source: Select USA). Which means six out of ten transactions performed by bots and automatic agents. In global markets next to professional traders you couldn't compete with fast reaction, huge changes could happen in a matter of seconds.

At the moment we don't even speaking about traders on market but more likely about competing strategies. Algorithms are quick enough to calculate the probabilities, potential outcomes and make the necessary trades in seconds.

Also one of the most important advantage of algo trading is that it eliminates the emotional impact of trading. Algorithms have no feelings and they will make the necessary steps even when a human would hesitate in a certain situation.

Algorithmic trading encompasses essential but variable aspects that you must perfect to benefit fully. It is a trendy aspect of trade, so many authors have written algorithmic trading books. These books offer a guide to those unfamiliar with the concept and give experienced users insights on bettering the idea. This article will look at some of the best books about algorithmic trading you need to read this year.

What Are The Essential Algorithmic Trading Books?

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (1)

Trading at the Speed of Light, by Donald MacKenzie (2023)

In Trading at the Speed of Light, Donald MacKenzie examines the impact of high-frequency trading (HFT) on global financial markets. He explains how HFT, which involves the use of algorithms to execute high volumes of transactions at lightning-fast speeds, evolved from the disreputable margins of the US financial system in the 1990s to become a ubiquitous feature of financial markets around the world. MacKenzie shows how HFT has brought new efficiency to trading, but has also led to an unrelenting race for speed, in which HFT algorithms compete against one another.

MacKenzie draws from over 300 interviews with high-frequency traders, technology providers, exchange staff, regulators, and others to provide a unique perspective on the inner workings of HFT. He highlights how the material, political, and economic characteristics of HFT have influenced global finance and what its future could look like. He explores how big banks have responded to the challenge posed by HFT firms and how exchanges sometimes favor certain types of algorithms over others. The book offers a remarkable look at how growth, technology, and politics have altered the landscape of financial markets and is a must-read for anyone interested in understanding the impact of HFT on finance.

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (2)

All-in On AI, by Thomas H. Davenport and Nitin Mittal (2023)

All-In on AI discusses how top companies use artificial intelligence for a competitive edge. This is particularly relevant for algorithmic trading, where fast and accurate decisions based on large data sets are critical. Algorithmic traders can benefit from understanding how these companies integrate AI, offering potential improvements to trading strategies, prediction accuracy, and returns.

The book also touches on AI's role in business models and customer relationships, providing insights that can be applied to market analysis and risk management. For traders looking to improve their algorithms with AI, this book could be a valuable resource.

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (3)

Algorithmic Trading Strategies, by Scotty Ratford (2022)

If you are ambitious enough and want to find out how you can make money using simple and effective algorithmic strategies, then this book is for you. It features income-generating trading strategies applicable for Forex, Stocks, and Crypto. It doesn’t matter what the trading position in the market is.

With a step-by-step guide, you will discover how you can create an individual algorithmic trading strategy as well as establish an automated bot for everyday trades despite all the other things you have to take care of.

The detailed guide has methods for creating and running the strategy without the need for coding or money-related expenditures. It also has secret indicators about TradingView to help you significantly increase profits that no one else is aware of. There are risk management strategies that are employed by experienced traders that are highlighted to guide you on how to maintain a profitable trade.

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (4)

Algo Trading Cheat Codes, by Kevin J Davey (2021)

Algo Trading Cheat Codes agrees that Algo trading can be challenging but also raises the question of whether it really has to be. The author's answer to that question is “No,” as long as you follow the appropriate approach and are advised accordingly.

Through the book, Kevin offers readers the results of extensive research with many strategies backtests. He also highlights more than fifty “cheat codes” for trading. These are valuable tips that traders can use to come up with algo strategies with more confidence and at a faster rate.

The book answers questions about easing algo trading when it seems more challenging and if there is a significant reward for risking the trade management ratio. It also lets readers know the ultimate and most amenable bar size for the creation of algo strategies. You will find out if exiting is a viable option, especially after several profitable and unprofitable closes, the best exit strategy, the best mean reversion techniques, and how to protect your algos during uncertainties.

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (5)

Algorithmic Trading Systems, by David Bean

This book evaluates different and advanced trading strategies available for markets in the future and analyzes how traders can utilize them in markets. As you read along, you will learn how to conduct trade filtering and be guided about several exit strategies. Additionally, you will also be shown how to use coding logic. The book will be helpful if you are looking to establish a platform in which you entirely handle coding individually.

Algorithmic Trading Systems is a book that is ideal for both novice and experienced algorithmic traders. The content in the book applies immensely to both parties. The book offers detailed information applicable to all levels of trading strategies. What’s more, it is a significant development of all that pertains to algorithmic trading- philosophical, psychological, and statistical. If you don’t have a lot of time in your hands, you will love this book because it straightforwardly presents information and gives details.

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The Ultimate Algorithmic Trading System Toolbox, by George Pruitt

You need this book if you are looking to gain algorithmic trade knowledge and maximize trade seamlessly. The algorithmic trade programming, evaluation, and implementation technologies keep evolving, but this book helps you. You can learn a lot about the assessment of trading systems and discover their strengths and defects through it. You will learn how to develop your trading solution and be shown how to employ coding to establish a trading solution effectively.

The book’s primary focus is the popular programming tools required to create and backtest the

technical aspects of trading systems. It shows that you can exploit the technology even without a computer science degree to make viable systems at a lower cost.

It features a broad spectrum of technology offerings and has advice on acclaimed trading software packages. There are detailed mathematical examples and explanations to grasp the highlighted concepts easily. The extensive and well-explained sample codes will draw you even more.

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (7)

Algorithmic Trading, by Investors Press

This is a valuable book for lay investors and those already well-versed with algorithmic trading. It demystifies the tasks that day traders, hedge funds, and brokerages carry out. You will find a simple yet detailed explanation relating to how algorithmic trading comes to be. You are also guided on the exact steps needed to develop and execute a trading algorithm. Additionally, you will be equipped about where to source consistent trading ideas and be helped to discover unhelpful ones. Learn how to trade without a coding background before going live to begin execution.

The book offers vital points about risk management straightforwardly for easy understanding. Get to know the essential tool for risk management that applies in every trade. You will also learn about the four prevalent pitfalls that traders make and how you can watch out for them. There are valuable resources to help you further your algorithmic trading knowledge and skills.

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (8)

Machine Learning for Algorithmic Trading, by Stefan Jansen

Algorithmic trading can benefit significantly from machine learning through the added design value and trading strategies. This book covers various data sources and a development process strategy with various machine learning solutions. It highlights different trading challenges to provide a strategic perspective and comprehensive understanding with practical tools for building on Machine Learning.

This book is simply about how to leverage machine learning to enable you to come up with trade designs and backtest automated strategies. You will learn how to do that using backtrader, Gensim, SpaCy, pandas, pyfolio, Zipline, and more. It is ideal for data analysts, data scientists, Python developers, investment analysts, and portfolio managers to get a hands-on machine learning experience.

You will learn how to use the market, image, and text data and employ machine learning to solve upcoming investment and trade challenges. You will also learn to develop a pairs trading strategy as determined by ETFs and US equity cointegration.

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (9)

Algorithmic Trading, by Jeffrey M Bacidore

This book delivers all essential aspects that pertain to algorithmic trading. It offers a practical introduction for those unfamiliar with the concept and makes it executable for the modern world.

The algorithmic landscape today is intensely technical, variable, and at the same time intimidating. However, Jeffrey helps readers by uniquely merging a theoretical knowledge with a practical guide based on his long-time experience in leading brokerages, NYSE, and a quant fund. He explains how to build and use algos using various contexts to provide an extraordinary and accessible framework for evaluating algo choices.

Through the book, you will find out if dark pools are useful, when to opt for a VWAP algo, and the functioning of portfolio algos. Additionally, you will also see how necessary routing is, compared to timing and child order placements and how you can measure the execution efficiency across different choices. Algorithm Trading is a guide that addresses the questions every algorithmic execution trader or portfolio manager keeps asking.

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (10)

Learn Algorithmic Trading, by Sebastien Donadio & Sourav Ghosh

Learn Algorithmic Trading is a book that helps you make out algorithmic trading fundamentals and effectively apply algorithms to actual market data. It offers a real-world strategy analysis. All this information is provided alongside detailed examples applicable in financial markets. You will learn how to develop your robots for algorithmic trading to avoid the need for human intervention.

Additionally, the book provides you with vital information about the application of machine learning for algorithmic trade signals with highlighted essential Python strategies. Readers are offered insights about building, visualizing, and analyzing trade strategies as determined by economic releases, mean reversion, trends, and more.

To help guide you about how you can improve the performance of your bots, the book contains information about building a back tester for running simulated trade strategies. What’s more, you will be helped to discover the deployment and incorporation of trading strategies in an actual market for improved and maintained profitability.

Future of Algo Trading

As machine learning and artificial intelligence become more prevalent, retail traders are beginning to wonder if they will be left behind. However, AI-powered bots are not the ultimate tool of professional traders. Retail traders could also utilize AI to give them an edge in the market. With AI tools like SmithBot (crypto trading), Outprfrm (AI trading advice), even retail traders could get almost instant ideas what they need to do or even tools to perform the actions automatically.

Machine learning is a subset of artificial intelligence that deals with the construction and study of algorithms that can learn from and make predictions on data. Professional traders have been using AI for years to help them make decisions about when to buy and sell stocks. However, retail traders have largely been left out of the loop.

But that doesn't mean that retail traders can't benefit from AI. There are a number of ways that retail traders can utilize AI to their advantage. For example, they can use AI-powered bots to help them trade more effectively.

Final Thoughts on Algo Trading Books

Algorithmic trading can be challenging for some. It entails the use of complex formulas and also employs mathematical models for trade plan creation alongside human oversight. That is why anyone who is actively involved or plans to get involved must be fully aware of how algorithmic trade works for it to be effective. Apart from learning as you practice or from others, the algorithmic trading books highlighted above are excellent choices to enhance your knowledge.

If you want to learn more about the practical side of trading, check out our selected Forex trading books.

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (12)

Joel Stafford

My profession is online marketing and development (10+ years experience), check my latest mobile app called Upcoming or my Chrome extensions for ChatGPT. But my real passion is reading books both fiction and non-fiction. I have several favorite authors like James Redfield or Daniel Keyes. If I read a book I always want to find the best part of it, every book has its unique value.

With over a decade of experience in online marketing and development, I bring a wealth of knowledge to the realm of algorithmic trading. My expertise extends to various facets of technology, including machine learning and artificial intelligence. As a seasoned professional, my background includes the creation of mobile apps, such as Upcoming, and Chrome extensions for ChatGPT.

Now, let's delve into the concepts presented in the article on algorithmic trading:

  1. Algorithmic Trading Overview:

    • Algorithmic trading involves using automated systems for order execution based on pre-programmed trade directives.
    • Automated systems account for variables like prices, time, and volume, allowing for faster and more frequent trades.
  2. Importance of Algo Trading for Retail Traders:

    • Algorithmic trading accounts for 60-75% of regular trading volume.
    • It enables retail traders to compete with professional traders by leveraging the speed and efficiency of algorithms.
    • Algo trading eliminates emotional impacts, ensuring consistent and rational decision-making.
  3. Books on Algorithmic Trading:

    • "Trading at the Speed of Light" by Donald MacKenzie (2023):

      • Explores the impact of high-frequency trading on global financial markets.
      • Discusses the evolution of HFT from the margins to a ubiquitous feature of financial markets.
    • "All-In on AI" by Thomas H. Davenport and Nitin Mittal (2023):

      • Highlights how top companies use artificial intelligence for a competitive edge in algorithmic trading.
    • "Algorithmic Trading Strategies" by Scotty Ratford (2022):

      • Provides income-generating trading strategies applicable to Forex, Stocks, and Crypto.
      • Offers a step-by-step guide for creating individual algorithmic trading strategies without coding.
    • "Algo Trading Cheat Codes" by Kevin J Davey (2021):

      • Presents more than fifty "cheat codes" for trading to enhance confidence in algo strategy development.
      • Addresses challenges in algo trading and provides valuable tips for traders.
    • "Algorithmic Trading Systems" by David Bean:

      • Evaluates different and advanced trading strategies for future markets.
      • Offers insights into trade filtering, exit strategies, and coding logic.
    • "The Ultimate Algorithmic Trading System Toolbox" by George Pruitt:

      • Focuses on programming tools required to create and backtest trading systems.
      • Demonstrates how technology can be exploited without a computer science degree.
    • "Algorithmic Trading" by Investors Press:

      • Demystifies algorithmic trading for lay investors and provides steps for developing and executing a trading algorithm.
    • "Machine Learning for Algorithmic Trading" by Stefan Jansen:

      • Explores the integration of machine learning into algorithmic trading for strategic perspectives and practical tools.
    • "Algorithmic Trading" by Jeffrey M Bacidore:

      • Merges theoretical knowledge with a practical guide based on the author's experience.
      • Addresses essential aspects of algorithmic trading and provides a framework for evaluating algo choices.
    • "Learn Algorithmic Trading" by Sebastien Donadio & Sourav Ghosh:

      • Helps understand algorithmic trading fundamentals and apply algorithms to real market data.
      • Covers application of machine learning for algorithmic trade signals and building back testers.
  4. Future of Algo Trading:

    • As machine learning and artificial intelligence become more prevalent, retail traders can utilize AI-powered bots like SmithBot and Outprfrm for trading ideas and automation.

In conclusion, the articles suggest that algorithmic trading is a complex yet essential aspect of the financial world, and there are valuable resources, including books, to enhance one's understanding and proficiency in this field.

Top 8+ Algorithmic Trading Books (2023) Outsmart Your Competition (2024)

FAQs

What is the number one trading book in the world? ›

The Intelligent Investor

This trading book is so revered that Warren Buffett said it was 'by far the best book on investing ever written'.

What is the most popular algo trading strategy? ›

Top Seven Algorithmic Trading Strategies
  • Momentum. Momentum trading is a classic day-trading strategy that's been around for ages, like over 80 years! ...
  • Trend Following. ...
  • Risk-on/Risk-off. ...
  • Arbitrage. ...
  • Black Swan Catchers. ...
  • Market Timing. ...
  • Inverse Volatility.
Nov 17, 2023

What is the best book to learn how do you trade? ›

IG's top 10 trading books
  • Market Wizards. with authorJack D. ...
  • When Genius Failed. with authorRoger Lowenstein. ...
  • Investment Biker. ...
  • One Up On Wall Street. ...
  • Pit Bull: Lessons from Wall Street's Champion Day Trader. ...
  • Reminiscences of a Stock Operator. ...
  • The Intelligent Investor. ...
  • Technical Analysis of the Financial Markets.

What is a profitable strategy for algo trading? ›

Statistical Arbitrage Strategy

This is a short-term profitable algorithmic trading strategy that indicates price inefficiency and misquoting of similar shares. However, this price change does not last long and corrects itself. But it is difficult for humans to track these minute changes manually.

Who is the greatest traders of all time? ›

These are counted as the best traders in the world, and given below are some of these.
  • Jesse Livermore. ...
  • George Soros. ...
  • Paul Tudor Jones. ...
  • Richard Dennis. ...
  • John Paulson. ...
  • Steven Cohen. ...
  • Michael Burry. ...
  • Conclusion.
Jun 19, 2023

What is the best day trading book? ›

Popular Day Trading Books
  • How to Day Trade for a Living: A Beginner's Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology Andrew Aziz.
  • A Beginner's Guide to Day Trading Online Toni Turner.

Who is the richest algo trader in the world? ›

James Harris Simons:

He is regarded as the father of algorithmic trading and the creator of Renaissance Technologies, a quantitative hedge fund. Because he uses mathematical models, algorithms, and strategic investments to take advantage of market inefficiencies, his funds are known as quantitative investors.

Which trading strategy has the highest success rate? ›

Indicator-Based Directional Trading

This strategy uses an indicator to determine the direction of the trade. The indicator provides a clear signal when it's time to enter or exit a trade, making it easy to work with. Traders who use this strategy can expect to see consistent results and high success rates.

What is the most profitable trading strategy of all time? ›

Three most profitable Forex trading strategies
  1. Scalping strategy “Bali” This strategy is quite popular, at least, you can find its description on many trading websites. ...
  2. Candlestick strategy “Fight the tiger” ...
  3. “Profit Parabolic” trading strategy based on a Moving Average.
Jan 19, 2024

What is the hardest trade to learn? ›

According to other contractors, electrical and HVAC are among the hardest to learn, but flooring and cleaning specialists were most likely to call their own crafts the toughest. Again, carpentry was viewed as one of the most difficult by both groups.

What is the easiest trading strategy to learn? ›

Moving averages are the perfect beginner trading strategy in my opinion. They clearly visualize the trend and provide straightforward trade signals. I would recommend starting with the 20 and 50-day SMAs and then optimize from there once you gain more experience. Always use stops to manage risk.

What is the fastest way to learn trading? ›

Scan business news and bookmark reliable online news outlets.
  1. Set Aside Funds. Assess and commit to the amount of capital you're willing to risk on each trade. ...
  2. Set Aside Time. ...
  3. Start Small. ...
  4. Avoid Penny Stocks. ...
  5. Time Those Trades. ...
  6. Cut Losses With Limit Orders. ...
  7. Be Realistic About Profits. ...
  8. Reflect on Investment Behavior.

What is the most sold financial book in the world? ›

Which is the most sold finance book in the world? Rich Dad, Poor Dad by Robert T. Kiyosaki is the best-selling finance book in the world. It has been translated into several languages and sold in many countries.

What is the most used trading chart? ›

Still, some of these charts have use cases that are common enough that they can be considered essential to know.
  • Pie chart. You might be surprised to see pie charts being sequestered here in the 'specialist' section, considering how commonly they are utilized. ...
  • Funnel chart. ...
  • Bullet chart. ...
  • Map-based plots.

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