Can Algo Trading Transform the Rhythm of Capital Markets?

Capital Markets CIO Outlook | Friday, September 06, 2019

Algo trading is gaining traction as the capital market industry looks to secure advancements to frame a better future.   

FREMONT, CA: Algo trading in financial instruments automatically determines order specifications with computer algorithms. It has its advantages when compared with manual trading. Algo trading reduces labor and other related costs, making the trading process more efficient, enabling large volumes of data to be analyzed in concise time frames. It provides the current and prospect players in the market with sharp insights into gaining competitive advantage. Also, trading has started gaining pace as businesses have started understanding the benefits of analytics in the highly dynamic business environment.

The algo trading market has witnessed many advancements mounting volumes of market data and the shift from conventional data analytics ecosystem to self-service business analytics. It is a benefit of technological advancement to the stock market, which is picking up fast with the traders and investors. To keep up with the changing times, algo trading has become essential for professional traders to ramp up the speed of execution using contemporary technology tools. Algo trading has the potential to help traders execute orders faster and expand strategy portfolios by using more advanced quantitative tools. It executes human emotions that often affect the performance of trading strategies.

Algo trading is beneficial for small investors which enhances liquidity in the market, streamlining the entry-exit process. The increased in-depth algo trading is suitable for capital markets as it eliminates price incompetence in trading securities. Algo trading receives feeds from exchanges about the price of the company's stock and the price in one currency will be converted with the help of forex rates. The expertise and technology required for algo trading are expensive and sophisticated. The key expertise needed to succeed in this area is the knowledge of statistics and programming, driving the finance market.

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