Verbull Word of the day
Finance glossary

Algorithmic Trading

Trading · advanced
Definition

Using computer programs to execute trades based on predefined rules.

Algorithmic trading automates order execution using rules based on price, timing, volume, or other models. It removes emotion, improves speed, and can split large orders to reduce market impact. Strategies range from simple execution algorithms to complex statistical and machine-learning models.

In a sentence

The desk relied on algorithmic trading to slice a massive order into thousands of small, rule-based trades.

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