What is Algorithmic Trading?

Algorithmic trading, often referred to as algo trading or automated trading, is a method of executing orders in financial markets using pre-programmed trading instructions. These instructions, or algorithms, take into account variables like price, volume, and timing to automate trading actions.

MQL4 BASICS - algorithmic trading

Key Features of Algorithmic Trading

Types of Algorithmic Trading Strategies

There are various strategies that traders and institutions employ when using algorithmic trading. Some popular ones include:

The Role of Technology

Algorithmic trading heavily relies on advanced mathematical models, high-speed communication networks, and sophisticated computer programs to make and execute decisions. Its rise has been facilitated by the rapid advancement of technology and the increasing complexity and scale of financial markets.

Benefits and Concerns

While algorithmic trading offers numerous advantages, like reduced costs and increased trading speed, it's not without its critics. Concerns include its potential to amplify market volatility and the lack of transparency in some trading algorithms, which can lead to unforeseen market behaviors.

In the next section, we'll delve deeper into the world of MQL4 and see how it fits into the realm of algorithmic trading.

NEXT UP: Benefits of Algorithmic Trading