Algorithmic trading is estimated to grow by USD 11.9 billion from 2024-2027, according to a recent report from Technavio. The market is estimated to grow at a CAGR of 12.23% during the forecasted period.
Algorithmic trading, also known as Algo trading, is a method used by institutional investors, including hedge funds, pension funds, and mutual funds, to make automated trades in financial markets such as stocks, bonds, currencies, and commodities.
The algorithmic trading market is experiencing heightened demand for market surveillance due to compliance requirements. Top vendors are enhancing data management strategies and addressing system gaps.
International and regional interdependencies are crucial for accessing optimal assets. Strategies include building high-risk infrastructures, augmenting equity markets, and leveraging technologies like AI, cloud solutions, and blockchain. Key players are focusing on business agility, automation, and market integrity to mitigate risks such as flash crashes and human error.
This approach employs predefined rules based on mathematical algorithms and computer programmes to identify trading opportunities and execute trades quickly and efficiently. The use of automation in algorithmic trading reduces human error and improves market liquidity, enabling effective risk management and market volatility mitigation. With the advent of artificial intelligence (AI) and financial service algorithms, as well as cloud-based solutions, algorithmic trading has become an essential tool in the financial services industry, particularly in the stock market and cryptocurrency market.
Price fluctuations in these markets are closely monitored, and algorithmic trading systems help institutional investors capitalize on opportunities and manage risk in real-time.
The Algorithmic Trading Market in North America has experienced substantial growth, driven by the financial markets’ continuous trade monitoring and surveillance. Algo trading, or the use of computer programmes and mathematical algorithms to execute trades based on predefined rules, is increasingly popular among hedge funds, institutional investors, pension funds, mutual funds, and other market participants.
This market encompasses various assets, including stocks, bonds, currencies, and commodities. Automation in algorithmic trading reduces human error and enhances market liquidity, risk management, and market volatility handling. Market transparency, accountability, speed, and efficiency are essential benefits, making it accessible to large enterprises and capital markets firms.
