Tuesday, November 29, 2011
Algoritmic trading is the term used in the electronic financial markets. Algoritmic trading also known as automated trading, or called as algo trading, black-box trading or robo trading. By this system people just use electronic platforms for entering trading orders with algorthm deciding the spect of order such as timing, price, or quantity of order, or other many cases initiating order without human intervention.
This system often used by pension funds, mutual funds, and other buy side institutional traders, to devide large trades into several smaller trades in order to manage market impact, and risk. Sell side traders, such as market makers and some hedge fungs, provide liquidity to the market, generating and executing orders automatically.
Algoritmic trading may be used in any investment strategy, including market making, intermarket spreading, arbitrage, or pure speculation (including trend following). Investment decision and implementation may be augmented at any stage with algoritmic support or may operate completely automatically.
This system often used by pension funds, mutual funds, and other buy side institutional traders, to devide large trades into several smaller trades in order to manage market impact, and risk. Sell side traders, such as market makers and some hedge fungs, provide liquidity to the market, generating and executing orders automatically.
Algoritmic trading may be used in any investment strategy, including market making, intermarket spreading, arbitrage, or pure speculation (including trend following). Investment decision and implementation may be augmented at any stage with algoritmic support or may operate completely automatically.
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