In power markets with a lot of renewable energy, traders rely on algorithms more and more.
Oct 2, 2021
Navigating today’s energy market is a complex exercise. Power trading times have moved from days to hours to seconds.
This is the reason more and more power traders are testing algo-trading, a digital solution that makes power trading safer and more cost-effective.
Algorithmic trading has existed in the financial markets for quite a while. Most trades in the financial markets are already machine-driven.
Now, algorithmic trading is making its way to the energy markets and it is especially relevant in the volatile intraday power market.
With more renewables in the energy mix, energy production depends on the weather but the weather – such as the wind and the sun – is dynamic, and the market needs to deal with a lot of volatility.
This is where algorithms and algo-trading are incredibly helpful.
Here are 3 advantages of using an algo-trading service in the intraday market.
Algo-trading makes it possible to trade within a specified mandate in terms of both price and volume. This is because in algo-trading you can build in functionality to ensure that mandates are always kept.
When it comes to timing in a market that moves fast, algo-trading is a solid solution.
One of the big advantages of an algo-trading service is that you can have pre-defined strategies set for many occasions. And you can assign a different strategy to every hour of trading.
This means that for every hour, traders can choose a strategy that is aggressive, passive or something in between.
An algo-trading service is always connected to the market and the orders will appear instantly.
In case of a new market opportunity where a change is needed, the algo-trader will modify the orders fast and always get the best price. For a single trader, this is impossible to achieve.
For us, the main benefit of using Volue's algo-trading service is that we have a service that works all trading hours, and gives us the opportunity to leverage market fluctuations to keep our costs down.
Urban Lundström Portfolio Manager at Umeå Energi
Talk to us about Intraday Access, Volue's algo-trading service that manages risk and optimises profit.
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