What is algorithmic trading? An ex-banker explains

I spent 23 years working in international banking, and if there's one thing I learned there, it's this: most trading decisions people make aren't driven by analysis but by emotion. At its core, algorithmic trading is nothing more than taking that emotion out of the equation: you write your rules down in advance, and a computer executes them. The same way every time, without doubt, without panic, without FOMO.

What a trading algorithm actually is

A trading algorithm is a set of agreements with yourself, translated into code. For example: under what conditions you buy, when you sell, how much capital you put into each position, and what your maximum loss per day may be. My own system runs on a bot I built with Replit's AI agent, connected to Bitvavo's API. The bot reads the market, places orders, and sticks to the rules — 24 hours a day, even when I'm out with my family.

What it isn't

Let's be honest, because that's often missing in this corner of the internet: an algorithm is not a money machine. It doesn't predict the market. All a good system does is consistently execute a small, predefined edge, and sideline your biggest enemy — yourself, staring at a red chart at three in the morning. A bad system also executes consistently: it just loses consistently. The quality of your rules determines everything.

The three building blocks

• An exchange with a good API. I use Bitvavo: EU-regulated, euro account, and an excellently documented API. Important: only give your API keys trading rights, never withdrawal rights.
• A place for your code to run. My bot runs on Replit and is hosted there 24/7. You can also use your own VPS — more on that in my article about AI agents.
• Rules you understand. This is the most important one. I discuss my trading strategies with an AI assistant, read books about it, and only go live once I can explain every single rule myself. Code you don't understand isn't a system — it's a gamble.

How to get started (without blowing yourself up)

Start on paper: write out your rules before you write a single line of code. Then test with amounts you can afford to lose without it hurting. Only increase your stakes once the system has proven itself over months — not days. And automate your risk management first, your entry logic second; most people do it the other way around, and that's exactly the wrong order.

Disclaimer: this article shares my personal experience and is not financial advice. Crypto and traded products are risky — prices can fall hard, and a system that worked in the past is no guarantee for the future. Only trade with money you can afford to lose.