Efficiency of Algorithmic Trading in Modern Markets

Authors : Swayam Salecha

Volume/Issue : Volume 8 - 2023, Issue 9 - September

Google Scholar : https://bit.ly/3TmGbDi

Scribd : https://tinyurl.com/5n6dt3pd

DOI : https://doi.org/10.5281/zenodo.8372303

Algorithmic trading (AT) is the use of computer programs to execute trades in financial markets. AT has become increasingly popular in recent years, as it offers a number of advantages over traditional manual trading, such as speed, accuracy, and consistency. This research paper examines the efficiency of AT in modern markets. It begins by providing a brief overview of AT and its benefits. It then discusses the different types of AT algorithms and how they are used. The paper then reviews the literature on the efficiency of AT, and presents the findings of a data analysis on the impact of AT on market quality. The findings of the study suggest that AT has a number of positive effects on market efficiency. For example, AT can help to reduce bid-ask spreads, improve liquidity, and enhance price discovery. However, the study also finds that AT can have some negative effects on market quality, such as increasing market volatility and facilitating market manipulation. Overall, the study concludes that AT is a generally efficient and beneficial trading method. However, it is important to be aware of the potential negative effects of AT on market quality, and to take steps to mitigate these risks.

Keywords : Algorithmic Trading, Market Efficiency, Bid- Ask Spreads, Liquidity, Price Discovery, Volatility, Market Manipulation.


Paper Submission Last Date
31 - December - 2023

Paper Review Notification
In 1-2 Days

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