What is algo-trading in the stock market?

 

Algo trading enables transactions without the intervention of a human broker.

Stock markets are efficiently run and companies tend to do better with greater participation by trading algorithms. Nonetheless, automated trading can put companies at risk of system malfunction.

Algorithmic Trading is a term that refers to all types of trading activities that are supervised by complex mathematical algorithms instead of people. Such a type of algorithmic trading does not imply specific objectives or limitations, as such definition does not provide much insight as to what types of trades are considered algorithmic in nature. Algorithmic traders generally operate with the explicit objective of generating incremental profit as well as providing liquidity.

The first use cases were developed by Mahdi Charmian and David Weisbach at Wall Street, who discovered the relevance of the algorithm!

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