Glossary

Algorithmic trading, also known as algo trading or automated trading, involves using computer programs and complex algorithms to execute trades in financial markets.

These algorithms are designed to make decisions based on predefined parameters or rules, such as market trends, price fluctuations, and trading volumes. Algorithmic trading can be used to execute various strategies, including high-frequency trading (HFT) and arbitrage. 🖥️

For example, an algorithm may be programmed to buy a stock when its 50-day moving average crosses above its 200-day moving average, signaling a bullish trend.

Fun fact: Algorithmic trading has become increasingly popular in recent years, with some estimates suggesting that it accounts for around 70% to 80% of the trading volume in US equity markets. This high prevalence is due to its ability to execute trades rapidly and accurately, reducing human error and emotional biases. 📊