The term algorithmic trading is often used synonymously with automated trading system. A study in 2019 showed that around 92% of trading in the Forex market was performed by trading algorithms rather than humans. It is widely used by investment banks, pension funds, mutual funds, and hedge funds that may need to spread out the execution of a larger order or perform trades too fast for human traders to react to. In the twenty-first century, algorithmic trading has been gaining traction with both retail and institutional traders. This type of trading attempts to leverage the speed and computational resources of computers relative to human traders. For trading using algorithms, see automated trading system.Īlgorithmic trading is a method of executing orders using automated pre-programmed trading instructions accounting for variables such as time, price, and volume.
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