What is Algorithm Trading?

Algorithm trading is a trading technique used in financial markets which involves transaction decision making via making use of various mathematical tools and algorithms.

The role of a human trader is nullified in this as it presents all profit-making opportunities in the market to the system much before they are spotted by the human trader and thus latter’s intervention is minimized. Thus, the decision making is comparatively faster and more accurate.

Algorithm trading is highly popular with institutional investors who usually deal with a large number of shares. It is also known as algo trading, black box trading etc and is highly technology intensive.