Algorithmic trading also known as automated trading is done through use
of electronic platforms for financial trading. Many investment bankers and
financial firms use algorithmic trading software for gaining
potential results of trading. To understand in basic terms, algorithmic or automated trading is done with the use
of some electronic platform for executing trade orders and financial trading.
The financial dealing done through algorithmic trading software makes use of
pre-programmed trading instructions. These instruction use variables like
timings, price, and quantity. Algotrading
is proved to be enormously helpful in dividing large trades into several
bifurcated small trades. This further helps in managing the impact of market
and risks. These quick dealings help in generating market liquidity through
automated execution of trading.
Many studies on Alogotrading have revealed that it has
done a significant job in benefitting the financial trading across globe. The
biggest advantage of algorithmic trading software can be seen
as a potential element in optimizing the cost of dealings in financial market.
It means less of resources and more outcomes due to automated transactions.
These researches have also proved that Algotrading
helps in enhancing the market quality by improving liquidity. If we talk about
the biggest change that automated
trading has brought to the financial market is entire automation of trading
process. It has fasten the transactions and dealing by financial market. It is
because of this immense automation that computers are acting like full fledge
brokers simplifying long and complex trade orders into many small trading
orders.
The advent of algorithmic trading has also
given rise to many entrepreneurial opportunities. Because of cheap set up cost
and complete automation, there are many individuals that have taken financial
trading as there full time business. This is the reason why, many software
companies today are offering varied range of algorithmic trading software to financial firms. This software is
capable on dealing with multiple trade strategies and hence, provides potential
opportunities to traders for gaining lucrative revenues.