Algorithmic Trading: Pros and Cons
Algorithms have become such a common feature in the trading landscape that it is unthinkable for a broker not to offer them because that is what clients demand. These mathematical models analyze every quote and trade in the stock market, identify liquidity opportunities, and turn the information into intelligent trading decisions. Algorithmic trading, or computer-directed trading, cuts down transaction costs, and allows investment managers to take control of their own trading processes. It is a style of trading and not a separate business.
This paper discusses the key effect that the rise in use of algorithms has on the trading environment, fund managers, and buy-side traders, as well as on integration issues, build or not to build. The paper also discusses the emerging Algorithmic trading trends. Algorithm innovation continues to offer returns for firms with the scale to absorb the costs and to reap the benefits.
Algorithms have become such a common feature in the trading landscape that it is unthinkable for a broker not to offer them because that is what clients demand. These mathematical models analyze every quote and trade in the stock market, identify liquidity opportunities, and turn the information into intelligent trading decisions. Algorithmic trading, or computer-directed trading, cuts down transaction costs, and allows investment managers to take control of their own trading processes. It is a style of trading and not a separate business.
This paper discusses the key effect that the rise in use of algorithms has on the trading environment, fund managers, and buy-side traders, as well as on integration issues, build or not to build. The paper also discusses the emerging Algorithmic trading trends. Algorithm innovation continues to offer returns for firms with the scale to absorb the costs and to reap the benefits.