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BENEFITS OF ALGO TRADING OF SECURITIES & ACCESS TO THE POOR AND LOWER INCOME GROUPS

Posted by Hakimi Abdul Jabar on August 5 2020, 10:38am

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BENEFITS OF ALGO TRADING OF SECURITIES & ACCESS TO THE POOR AND LOWER INCOME GROUPS

 

 

Algorithmic trading is a method of executing orders using automated pre-programmed trading instructions accounting for variables such as time, price, and volume.  This type of trading was developed to make use of the speed and data processing advantages that computers have over human traders.  

It is widely used by investment banks, pension funds, mutual funds, and hedge funds that may need to spread out the execution of a larger order or perform trades too fast for human traders to react to. A study in 2016 showed that over 80% of trading in the FOREX market was performed by trading algorithms rather than humans.

The term algorithmic trading is often used synonymously with automated trading system. These encompass trading strategies such as black box trading and Quantitative, or Quant, trading that are heavily reliant on complex mathematical formulas and high-speed computer programs.

Algorithmic trading has been shown to substantially improve market liquidity.

Thus, the collective poor & lower income groups now have the access to algo trading tools once reserved only for investment banks, hedge funds, mutual funds private equities etc.

The advantages of algo trading are related to speed, accuracy, and reduced costs. Since algorithms are written beforehand and are executed automatically, the main advantage is speed.  Hence, two emotions that lead to poor decisions that algo traders aren't susceptible to are fear, and greed.

The Software Suite is a registered legitimate niche FinTech software developer & provider and advisory-consultancy etc. that continuously creates & develops FinTech software for its accessability to the poor & lower-income groups among others.

Alessandro Bigiotti and Alfredo Navarra (October 19, 2018), "Optimizing Automated Trading Systems", Advances in Intelligent Systems and Computing, Springer International Publishing, pp. 254–261 (ISBN 978-3-030-02350-8)

Terrence Hendershott, Charles M. Jones and Albert J. Menkveld (2010), "Does Algorithmic Trading Improve Liquidity?" Journal of Finance, 66: 1–33.

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