The e*star Algo A-Team

In today's energy market, you have to be quick on your feet, as factors like weather and geopolitical events cause prices to fluctuate rapidly. This need for speed and precision in trading is the final blow for manual trading. Now, algorithmic trading is the only way to keep up with the market’s demands.

At e*star, we are proud to have a dedicated team - our A-Team - comprising Patrick Fodor, Corentin ‘Coco’ Charles, and Manuel Danner, who are at the forefront of creating and managing custom-made algorithms to ensure our customers stay ahead.

Not many of us remember the days when energy trading was done manually. Either a phone call was made or traders would meet on the floor to buy and sell energy commodities. Luckily, those days are in the past. And just like we’re leaving the traditional, and also polluting, commodities like oil and coal behind, we’re looking towards a carbon neutral future where an increasing amount of renewables enters the energy market. Naturally, renewable energy can be quite volatile with energy prices changing at the speed of light due to factors like weather and geo-political events. This is a pace that human traders can no longer keep up with. And that’s when algorithmic trading comes into play.  

So, what exactly is algorithmic trading?

It’s also known as automated trading, black-box trading, or algotrading and to put it simply: a computer program does the trading for you. The program is given a defined set of instructions (also known as an algorithm) so that trade can be made at speeds and frequencies that are pretty much impossible for human traders to achieve.

But, who creates these algorithms? Humans, of course! And at e*star we are proud to have our very own Algo Team consisting of Patrick Fodor, Corentin ‘Coco’ Charles, and Manuel Danner, who create and manage custom-made algorithms for our customers.

Introducing the A(lgo)-Team

Just like B.A. Baracus was the A-team’s muscle and H.M. Murdock was the pilot, each member of our Algo Team also has his own strength. Patrick concentrates on strategies, Coco works on performance, and Manuel is the organizational brain! Unlike B.A. and Murdock, though, our Algo A-Team team has a strong bond and high trust in each other, which leads to a positive work environment for all. 

Together, our Algo Team has:

• over 30 years of knowledge with Python and Golang
• and 20 years of experience as a team developing trading algorithms, specifically in the energy and finance sectors.
  
  

They also have extensive know-how of asynchronous systems and market data, while being motivated by a deep passion for the field of trading algorithms.

Their Mission: Optimizing Energy Trading

On a daily basis, our Algo Team solves technical challenges around energy trading, so that our customers can concentrate on finding the best trading logic and parameters to market their assets, like wind, solar power plants or battery storage systems. 

The number of order updates are increasing exponentially in the energy market and that’s why the Algoteam’s algorithmic assistance gives energy traders the support (and edge) they need.

But ready-made algorithms exist. Why would someone need to develop a new algorithm?

Well, in the current market, there’s a new algo-trading start-up making its debut every two weeks. They bring different ideas and innovations but also take away market share. Thanks to the constant arrival of new competition, companies are under pressure to continuously enhance and upgrade. If they only use ready-made algorithms then there is a high probability that their company will fall behind the competitors that innovate faster with custom-made algorithms.

Additionally, the rules for trading strategies have grown more complex. It's no longer just about closing positions; now, you also have to manage things like storage, battery technology, and combined strategies that involve multiple factors. The custom-made algorithms our Algo Team makes handle these complex strategies much better. In addition to creating algorithms, the team also assists customers at developing and improving their own algorithms.

Operation Overcome Challenges

Our Algo Team also faces challenges, nothing as life-threatening as a helicopter flight with Murdock, but  to have everything running smoothly, they do require sophisticated systems and careful planning.

In trading, especially on electronic exchanges, order placements, updates, and trades don’t always happen in a synchronized way. This can be challenging because the system needs to handle multiple events happening at different times, often in rapid succession. It can be hard to ensure that all the data is processed in the right order and at the right time.

Trading generates a huge amount of data. With every order being placed, modified, or canceled, an "order update" is created. There are about 100,000 order updates per contract and market area per day, and given that you’re dealing with around 200 contracts and 20 market areas, the volume of data is gigantic. For instance, in EPEX SPOT (a European power exchange), you very well might be dealing with up to 150 million order updates per day.

While these challenges may look overwhelming, our Algo Team rises to them daily, ensuring that the needs of different users are met without compromising the system’s performance.

A Look into the Future

Only a few years ago, algotrading was a new and innovative concept in the energy sector. Now, it is a must-have and the market is becoming more crowded with new players, especially with startups that are relying on algotraders. 

So what does the future hold for energy trading? Our Algo Team has some ideas:

• Trading strategies will become more flexible as the market evolves, meaning that strategies will have to be dynamically adjusted based on real-time data or market conditions.
  
  
• With an increasing focus on trading energy storage, especially batteries, algorithms will need to be tailored to handle the characteristics and trading behaviors of new types of batteries like sodium or even redox flow batteries.
  
  
• Models that can simulate and forecast the entire energy system are currently in development. This would also include predicting demand, determining when maintenance is due on wind turbines, and other operational aspects. These models will be crucial for optimizing energy production and trading.
  
  

  The future of algotrading is looking bright for our customers, driven by the Algo Team’s decades of expertise and ability to solve complex technical challenges. This allows our clients to focus on strategic decision-making without being burdened by the technical demands of trading. That’s why we would like to give a big thanks to Patrick, Coco, and Manuel for continuing to strive for innovation and adaptability, so that clients will be able to easily navigate the future challenges of energy trading.