What is Algorithmic Trading?
Algorithmic trading is a set of defined instructions aimed to carry out a task. A human trader cannot handle such enormous data and that is when you need a patterned algorithm. Algorithms have gained immense popularity in recent years and big clients demand them. These algorithms use mathematics and analyze every trade in the stock market and identify liquidity opportunities.
Algorithmic trading is useful for traders as it reduces the transaction cost and investment managers can control their own trading process. In Algorithmic trading, there are different techniques to reap benefits like Simple Moving Average and Momentum Based Technique. Algorithmic trading is the process of using a computer program to follow a defined set of instructions for placing an order to generate maximum profits. A trader needs to identify an opportunity that is profitable. Apart from profit opportunities for the trader, algorithmic trading makes more liquid and makes trading more organized.
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