What are the risks associated with algorithmic trading?

Algorithmic trading, also known as algo-trading, is the use of computer programs to execute trades based on pre-defined instructions. It has become increasingly popular in the financial industry due to its potential benefits, such as increased efficiency and speed. However, with any new technology comes risks that traders must be aware of. What are the risks associated with algorithmic trading?

 

This presentation will explore the risks associated with algorithmic trading and discuss strategies for mitigating those risks.

 

What is Algorithmic Trading?

 

Algorithmic trading is the use of computer programs to automatically execute trades based on pre-defined instructions. These instructions can be based on a variety of factors, such as market trends, news events, or technical indicators.

 

The programs used in algorithmic trading are designed to analyze large amounts of data and make decisions based on that analysis. This allows traders to execute trades more quickly and accurately than if they were doing so manually.

 

Benefits of Algorithmic Trading

 

One of the main benefits of algorithmic trading is increased efficiency. Because the programs used in algo-trading can analyze and execute trades much faster than humans, traders can take advantage of market opportunities more quickly.

 

Algorithmic trading can also increase accuracy by removing the potential for human error.

 

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