Algorithmic trading refers to the use of computer algorithms to execute trades based on predefined criteria. These algorithms analyze market conditions, manage orders, and can execute trades at speeds far surpassing human traders. Common strategies include arbitrage, trend-following, and market-making. Typically, algorithmic trading is employed to improve efficiency, minimize costs, and reduce human emotional biases in trading decisions. Traders leveraging this approach often utilize quantitative models that enable them to react to market fluctuations in real-time, thus capitalizing on minute price movements across various asset classes.
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