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Chapter 5. Trends in Trading and Exchanges > The Growth of Algorithmic Trading

The Growth of Algorithmic Trading

The era of algorithmic trading has begun. Algorithmic trading promises to cut costs, eliminate human error, and boost trading efficiency and productivity. The use of algorithms to make complex decisions and place thousands of orders in milliseconds has grown in popularity, particularly among equity and currency traders in recent times. Algorithmic trading, also known as algo trading, is defined as the placement of a buy or sell order of a defined quantity into a quantitative model that can automatically generate the timing of orders and the size of the orders on the basis of the parameters and constraints of the algorithm specified to achieve a certain trading objective.

The following is a definition of an algorithmic trading system by Investopedia:


  

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