Algorithmic trading, commonly known as algo trading, is a sophisticated method of executing financial transactions through pre-programmed computer algorithms. It involves the use of advanced mathematical models and statistical analysis to automate the trading process.
The primary objective of algo trading is to capitalize on market opportunities with speed and efficiency that surpass human capabilities. Algorithms can analyze vast amounts of market data, identify patterns, and execute trades at optimal prices and timings. This approach eliminates emotional biases, minimizes human errors, and ensures quick responses to market changes.