The useful starting point
An algorithm is a set of rules. Automation changes how those rules are executed; it does not remove investment risk.
What an algorithm actually does
Algorithmic trading uses defined rules to turn data into trading decisions. A strategy might respond to prices, economic releases or another documented input. Its rules determine what to hold, when to change an exposure and when to remain in cash. Software then translates those decisions into instructions that a broker can process.
The label covers many different approaches. A slow-moving allocation model and a session-specific equity strategy can both be algorithmic. Understanding the instrument set, timing and construction is more useful than treating the word “algorithmic” as a description of risk.
The three layers to understand
In SquaredQ’s documented setup, a standardized strategy publishes target weights. Your dedicated execution software receives the targets and applies your selected allocation, account state and available broker capabilities. The broker receives the resulting orders and is responsible for the account and execution.
These are distinct layers. A valid strategy target does not guarantee that an order will be accepted, and an accepted order does not guarantee a particular fill price. Reading all three layers helps explain why a research result and a live account can differ.
Your choices before activation
You choose the product, broker, allocation and available account-level risk response. Those choices are meaningful: a fixed-capital allocation behaves differently from a percentage of account NAV, and an account-wide close action has a different effect from disconnecting future execution.
You do not choose each underlying security or approve every individual order once the configuration is active. The software can operate unattended. Take time to understand that distinction before moving from research to execution.
A useful way to evaluate a strategy
Start with the economic thesis, then examine the evidence and implementation. What data was available at the time? What costs are included? Where does the strategy trade, and what happens when the market or broker is unavailable? A smooth historical chart answers none of these questions on its own.
Use the Data Room guide to understand the research documents, and review the full activation journey before connecting a live account. Historical results and disciplined execution still leave you exposed to losses.
