Algorithmic trading has become very popular among traders that are placing large orders on stock exchanges. The computer programs used to execute orders according to a pre-defined strategy on financial instruments are becoming more and more sophisticated. The main driver of this trend is the cost of algorithmic trading that is on average lower than the cost of manual orders execution. The algorithms spread worldwide among institutional investors, market makers, pension and investment funds. In this paper the main objectives of algorithmic trading are presented, as well as the automated strategies. The risk of algorithmic trading is also discussed.
Financed by the National Centre for Research and Development under grant No. SP/I/1/77065/10 by the strategic scientific research and experimental development program:
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