What is the main principle behind algorithmic trading? 🔊
The main principle behind algorithmic trading is the use of automated algorithms to execute trades in financial markets. This approach leverages complex mathematical models to analyze vast amounts of market data, identify trading opportunities, and execute orders at high speed. Algorithmic trading aims to minimize human emotion and error, enhance trading efficiency, and capitalize on market inefficiencies. By employing algorithms, traders can execute large volumes of trades with precision, ultimately aiming for better returns on investment.
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