What is algorithmic trading?

Posted on 2023-04-19

Algorithmic trading, also known as automated trading, is a trading strategy that uses computer programs to execute trades automatically based on pre-defined criteria. These programs are designed to analyze market data, identify trading opportunities, and execute trades at high speeds, often faster than human traders can react.

Algorithmic trading involves writing a set of rules and instructions that are programmed into software and can be executed automatically without human intervention. These rules may be based on technical indicators, such as moving averages or MACD, or on fundamental data, such as economic news releases or corporate earnings reports.

Algorithmic trading can be used in a variety of financial markets, including the forex market, stocks, commodities, and derivatives. It is often used by large institutional investors, such as banks and hedge funds, to manage their portfolios and execute large trades efficiently.

Overall, algorithmic trading has become increasingly popular in recent years due to advancements in technology and the ability to analyze vast amounts of market data in real-time.

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