May, 2012 5:16 AM
Algorithmic Trading
Algorithmic Trading refers to automated trading systems that use advanced mathematical algorithms to instruct computers on making trade decisions on financial markets. Also referred to as robo trading, black-box trading or algo trading.
.
In most cases, by using algorithmic trading, the need for human intervention and review of orders to buy or sell securities completely disappears. The mathematical models for computer decision making on stock markets have built-in rules for determining the best time to place orders and start transactions without producing strong effects on share prices.
Algorithmic trading is widely used in investments made by hedge funds and other large institutional investors to deal with high trading volumes on a daily basis. The automated trading models divide large share packages into smaller ones in order to better manage risks, and to reduce the impact on share prices.
RELATED TERMS
TheBull's free daily and weekly newsletters
Click here to receive TheBull's free weekly newsletters on stocks, trading, investing and more.
- 22.05.2012 Paris, Berlin make Greece euro pledge
- 22.05.2012 European stocks rebound on G8 support
- 21.05.2012 US stocks rebound in opening trade
- 21.05.2012 Dulux offer for Alesco ends in June
- 21.05.2012 Market Wrap
- 21.05.2012 $A rises slightly on Spanish news
MoreRELATED ARTICLES
Options Shorting Strategies for Beginners
As an options seller you do not want to expose yourself to too much time risk, since the magnitude of an adverse move could increase on a longer time frame.
How are CFDs taxed?
Stephen Calder clears up the confusion surrounding the tax treatment of CFDs.
Diamonds: The Missing Commodity Derivative
While they may be "a girl's best friend", diamonds haven't made it to the futures market - yet.
MoreASK THE EXPERT - CFDs
How do I trade CFDs over international shares?
View answer.
When is the best time to trade CFDs?
View answer.
What is momentum trading? And how does it work?
View answer.
RESOURCES & OFFERS
Trade on your terms in the biggest market in the world - FOREX
Try Forex Now
