What is Algorithmic Trading?
Algorithmic trading uses computer programs to execute trades automatically based on predefined rules and strategies, removing human emotion and enabling split-second execution.
Algorithmic Trading Explained
Algorithmic trading now accounts for over 60% of US stock market volume. Algorithms can execute complex strategies, scan thousands of securities simultaneously, and react to market conditions faster than any human. While retail traders can't compete on speed, they can use algorithmic concepts to systematize their own trading rules and reduce emotional decision-making.
Real-World Example
An algorithm monitors 500 stocks and automatically buys when RSI drops below 30 and the price is above the 200-day moving average, with a 5% stop loss and 10% target. It can execute this strategy across hundreds of stocks simultaneously, something impossible for a human trader.
Related Terms
Build Discipline Around Algorithmic Trading
Understanding Algorithmic Trading is one thing. Applying it consistently is where most traders fail. Ivern AI helps you build the daily habits to actually use what you know.
Start Building Discipline — Free