Algorithmic Trading

Algorithmic trading is a term which refers to the use of computers and advanced mathematics to make decisions about the timing, price and quantity of a market order. It is widely used by banks, hedge funds, pension funds and mutual funds. Large trades are broken down into smaller ones to minimise market impact and risk. Trades are made without human intervention using information received electronically. Millions of orders can be executed each second and dozens of public and private exchanges can be scanned simultaneously. As of 2009 algorithmic trading made up nearly 30 percent of stock trading volume in the U.S.

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