Algorithmic Trading
Algorithmic trading (or algo trading) refers to the use of computer algorithms to automatically buy and sell securities based on a set of predefined rules. These rules can be triggered by factors like stock price, trading volume, time, or other market conditions. Algo trading aims to execute trades at optimal prices and speeds, minimizing human intervention and errors. It is widely used by institutional investors to improve efficiency, reduce costs, and take advantage of market opportunities in real-time. The strategy allows for high-frequency trading, which can be more precise and faster than manual trading.
Related Terms
Cash Flow Statement
A cash flow statement tracks a business’s cash inflows and outflows over a specific period,...
Forward Price
The forward price is the agreed-upon value at which a forward contract is settled and...
After Market Order (AMO)
After Market Order is an instruction directing a broker to place the order at the...
Beta of Stocks
Beta measures a stock’s risk relative to the broader market, which has a default Beta...
Bull Market
A bull market describes a sustained upward trend in the stock market. It signals optimism...
Interest Rate Risk
Interest rate risk is the potential drop in a fixed income security’s value due to...
