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