Ultimate Algorithmic Trading System

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FIGURE 1.6
■ Summary
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An FC of a trading algorithm.
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In this chapter, the necessary tools for creating a trading algorithm were introduced.
Describing your ideas on paper (real or virtual) is the very first step in the algorithm
development process. A template was shown that can be used to help facilitate this.
Just getting a trading idea on paper is not sufficient to move onto the pseudocode
phase. All ideas must be translated into mathematical expressions and Boolean
logic. These expressions and logic must be in a form a computer can understand.
Ambiguous directions must be eliminated and replaced with pure logic. Once the
idea is written down and further reduced into an extremely logical list of directives
and calculations or formulae, the trader must then decide what type of paradigm to
use to get the logic into something that can be eventually programmed or scripted.
The FSM, as well as the FC methods, were both introduced and used to convert
trading schemes into complete pseudocodes. These two paradigms have always been
present, and many algorithmic traders have used them without realizing the different
programming methods. With knowledge of the two different methods, hopefully
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INTRODUCTION TO TRADING
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