Algorithmic Trading Market - Growth, Trends, and Forecasts (2020 - 2025)

The algorithmic trading market is expected to register a CAGR of 11.23% in the forecast period from 2020 to 2025. Traditionally, traders keep track of their trading activities and investment portfolio by using market surveillance technology. Applications, such as algorithmic trading, have built-in intelligence to search for the opportunities that exist in the market, as per the yield and other criteria defined by the user. Factors, such as favorable government regulations, increasing demand for fast, reliable, and effective order execution, growing demand for market surveillance, and reducing transaction costs, are expected to spearhead the need for the algorithmic trading market. Institutional investors and big brokerage houses use algorithmic trading to cut down on costs associated with bulk trading.

• Factors, such as favorable government regulations, increasing demand for fast, reliable, and effective order execution, growing demand for market surveillance, and reducing transaction costs, are expected to spearhead the need for the algorithmic trading market. Institutional investors and big brokerage houses use algorithmic trading to cut down on costs associated with bulk trading. Furthermore, the emergence of AI in the financial service sector is expected to be a major factor aiding in the growth of the algorithmic trading market. Regulators are also starting to take note of the ways by which individuals interact with the market due to advances in artificial intelligence. For instance, in May 2010, the House of Representatives announced the creation of a Task Force on Financial Technology and a Task Force on Artificial Intelligence.
• Further, Algos, with the help of pre-defined rules, backtested, and placed at pre-defined levels, can also analyze every quote and trade in the stock market. Thus, these programs identify liquidity opportunities and turn such information into intelligent trading decisions. For instance, in April 2020, Bitcoin suddenly jumped by 20%. Some observers speculated that algo trading might have been the factor behind the sudden move in the world's most popular cryptocurrency. Liquidity plays a vital role in the financial market. Thus, algorithmic trading creates a situation to maintain the liquidity, exceptionally high liquidity, in demand, due to rapid buy and sell orders, without any human intervention. Algorithmic trading works when big trades are fed into computers running relevant programs.
• In the age of cloud deployment, the cloud-based algorithmic trading platforms are expected to play a significant role in the growth of the market, owing to various benefits, like a gain of maximum profits, as cloud-based trading solutions help traders to automate their trading process, easy trade data maintenance, cost-effectiveness, scalability, and effective management. Cloud-based trading works on the cloud computing model that uses networks of remote servers usually accessed over the internet to store, manage, and process data. Attributed to the convenience of the cloud, traditional traders can deploy algorithmic trading in the cloud to check new trading strategies, backtest, and run-time series analysis, while executing trades.
• Due to the spread of coronavirus, stock markets plunged in March 2020, triggering circuit breakers that halted market-wide trading several times. Algo trading has been contributing to the market rebound after the March lows. Thus, algorithmic execution tools in foreign exchange increased significantly since March 2020. As per the latest Survey by JPMorgan, more than 60% of trades for ticket sizes bigger than USD 10 million were executed in March via an algorithm. This was compared to less than 50% a year ago. Hedge funds and real money accounts are leading the end-user industry. Additionally, a report on algorithmic trading by the National Institute of Financial Management, submitted to the Department of Economic Affairs in May 2010, found that algorithms accounted for half the orders on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).