ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Algorithmic trading (also called automated trading, black-box trading, or algo-trading) uses a computer program that follows a defined set of instructions (an algorithm) to place a trade. The trade, in theory, can generate profits at a speed and frequency that is impossible for a human trader.

Detailed explanation-2: -The greatest portion of present day algorithmic-trading is high frequency trading (HFT). This trading method attempts to capitalize on placing a large number of orders at very fast speeds, across multiple markets, and multiple decision parameters, based on per-programmed instructions.

Detailed explanation-3: -Stock market algorithms are computer programs that can perform market filtering, analytics, and trade executions in the stock market. They can be as simple as bracket orders or extrapolated a thousand times over with a million lines of code.

Detailed explanation-4: -Short-term trading is also referred to as active trading, as the style involved differs so heavily from the strategy of investing in or trading passive funds. It is usually speculation based, which means that it doesn’t need to involve the buying and selling of the underlying assets themselves.

Detailed explanation-5: -Short-term trading refers to those trading strategies in stock market or futures market in which the time duration between entry and exit is within a range of few days to few weeks.