Did you know algorithmic trading originated from pair trading? Alfred Jones was the first trader who used a 3:7 ratio of short to long to conduct pair trading.
There are many algorithmic trading strategies. Each strategy has its own advantages. Sniffers is a general type of strategy. Usually, traders use this strategy to develop more complex algorithms to monitor the market and transaction data to find out whether there are other algorithmic traders among traders.
Lest learn this strategy with a simple example. For example, if you are placing a small number of tentative orders and combined them with certain algorithms and transaction conditions. In this way, you can determine whether there are other orders that are required to be processed from algorithmic trading methods. If more traders are using the algorithmic trading methods. You can easily determine greater profitability. In fact, it is obvious you are required to do some calculations to determine whether you will obtain absolute returns or not.
What you want to do next depends on the calculated results. If you will realize that if you follow algorithmic trading, you will achieve profitability. Maybe it is possible to do a completely different trading activity. If you are certain that the probability of profit is high, you can place orders through targeted algorithmic trading strategies.
Sniffers strategy is different from traditional algorithmic trading strategies. Because it is not used for executing orders but to achieve greater profitability. Sniffers trading strategy is more advanced and suitable for markets where algorithmic trading has been widely used.
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