What is algorithmic trading

This question is one of the important for traders,

Usually, on groww.info we don't discuss trading. Only about pure long-term logical investing.

Algorithmic trading or in short Algo trading is becoming popular these days among full-time traders.

There are many brokerage firms that offer an Algo trading platform. For example FYERS.

So what is algorithmic trading ?

Algo trading

As the name suggests, it's a set of logical programs.

As a trader, when you trade stocks, you may have certain rules and formulas for trading. Right?

When those conditions are met, you choose to buy or sell a stock.

And then you yourself do the buying or selling.

But, many tech-savvy investors program or code computer software to follow these rules.

So, instead of the investor themselves buying or selling, the computer does it for them.

Such traders are called algo traders. They specialize in coding or writing software specifically for stock trading.

This might sound very fascinating to many. As it allows them to set their own formulas in algo trading.

The truth is, the number of investors who are successful at algo trading are quite a few. You may say, it's quite new to traders.

And algo-trading has its own limitations when compared to humans.

Having said that, there’s no doubt that algo-trading, when done right, has many advantages over human investors also.

Of course, many traders use their gut feeling for making decisions and that, computers cannot do.

Let me know your thoughts on Algo-trading.

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