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Python For Trading – An Introduction – Part III

Python For Trading – An Introduction – Part III

Posted December 28, 2021
Viraj Bhagat

See Part I and Part II for an overview.

Benefits and Drawbacks of Python in Algorithmic Trading

Let us list down a few benefits of Python first.

  • Parallelization and huge computational power of Python give scalability to the trading portfolio.
  • Python makes it easier to write and evaluate algo trading structures because of its functional programming approach. Python code can be easily extended to dynamic algorithms for trading.
  • Python can be used to develop some great trading platforms whereas using C or C++ is a hassle and time-consuming job.
  • Trading using Python is an ideal choice for people who want to become pioneers with dynamic algo trading platforms.
  • For individuals new to algorithmic trading, the Python code is easily readable and accessible.
  • It is comparatively easier to fix new modules to Python language and make it expansive in trading.
  • The existing modules also make it easier for algo traders to share functionality amongst different programs by decomposing them into individual modules which can be applied to various trading architectures.
  • When using Python for trading it requires fewer lines of code due to the availability of extensive Python libraries.
  • Python makes coding comparatively easier in trading. Quant traders can skip various steps which other languages like C or C++ might require.
  • This also brings down the overall cost of maintaining the trading system.
  • With a wide range of scientific libraries in Python, algorithmic traders can perform any kind of data analysis at an execution speed that is comparable to compiled languages like C++.

Just like every coin has two faces, there are some drawbacks of using Python for trading.

In Python, every variable is considered as an object, so every variable will store unnecessary information like size, value and reference pointer. When storing millions of variables if memory management is not done effectively, it could lead to memory leaks and performance bottlenecks.

However, for someone who is starting out in the field of programming, the pros of using Python for trading exceed the drawbacks making it a supreme choice of programming language for algorithmic trading platforms.

Stay tuned for the next installment in which Viraj Bhagat will present a comparison “Python vs. C++ vs. R.

Visit QuantInsti to learn more about Python

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