Algo trading, or algorithmic trading, is the use of computer programs to automatically buy and sell financial assets. It involves creating and implementing rules that automate the trading process.
How does algo trading work?
- Market data: Algo trading systems use real-time market data to make trading decisions.
- Rules: Algo trading systems are programmed with a set of rules that define when to buy and sell.
- Execution: The computer program executes trades at high speed and accuracy.
Benefits of algo trading
- Speed: Algo trading systems can execute trades faster than humans.
- Accuracy: Algo trading systems are free of human error.
- Risk management: Algo trading systems can be programmed to set stop-loss orders to limit potential losses.
