According to the latest report by IMARC Group, titled “Algorithmic Trading Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2019-2024”, the global algorithmic trading market size grew at a stable rate during 2013-2018. Algorithmic trading, or algo-trading, is the process that uses a computer program to execute orders. This program utilizes a defined set of automated instructions, called an algorithm, which is based on quantity, timing, volume and price. There are different aspects of an algo-trading system, including pre-trade analysis, trading signal, trade execution and post-trade analysis. Algorithmic trading makes decisions of purchasing or selling financial securities on an exchange with various complex formulas, combined with human oversight and mathematical models. These systems often use high-frequency trading technology, which enables a firm to make a large number of trades per second. Other than the execution of an order, algorithmic trading can also be used in different applications, such as arbitrage and trend trading strategies. These systems are primarily utilized by institutional investors and big brokerage firms to create liquidity and reduce trading costs.
Global Algorithmic Trading Market Trends:
Over the past few years, there has been a rise in the demand for fast and effective order execution, owing to which industry players are conducting research and development (R&D) activities to incorporating new technologies in algo-trading, such as cloud computing, data sciences, application programming interface (API) trading, and Python – programing language. The integration of such technologies will help in making these systems readily available for small-scale traders, including retailers, individual traders and investors. Besides, the industry growth can be accredited to the escalating demand for market surveillance. With the help of efficient market surveillance technology, traders can keep track of their investment portfolio and trading activities. Moreover, the availability of improved algorithmic trading solutions has also enabled high-frequency traders to execute orders and manage risk according to predefined trading strategies. On account of the aforementioned factors, the market is expected to grow at a CAGR of around 10% during 2019-2024.
- Based on the trading type, the market has been segmented into foreign exchange (FOREX), stock markets, exchange-traded fund (ETF), bonds, cryptocurrencies, and others. Amongst these, stock markets exhibit dominance in the market.
- The market has been bifurcated on the basis of the component, which includes solutions and services. Currently, solutions are the most popular component that is further divided into platforms and software tools.
- The report has analyzed the market according to the deployment model, which consists of on-premises and cloud. At present, the on-premise model is mostly preferred in the market.
- On the basis of the organization size, the market has been divided into small and medium enterprises, and large enterprises. Currently, algorithmic trading is mostly deployed in large enterprises.
- On a regional basis, North America is the biggest market, accounting for the majority of the total market share. This growth can be attributed to the increasing usage of algorithmic trading in banks and financial institutions. Other major regions include Europe, Asia Pacific, Latin America, and Middle East and Africa.
- The competitive landscape of the market has also been examined with some of the key players being Vela Trading Technologies LLC, Meta-Quotes Software Corp, Trading Technologies International, Inc., Software AG, AlgoTrader AG, uTrade Solutions Pvt Ltd, Automated Trading Softtech Pvt. Ltd., Kuberre Systems, Inc., InfoReach, Inc., VIRTU Financial Inc., Tata Consultancy Services Limited, Argo Group International Holdings Ltd., Thomson Reuters Corp, iRageCapital Advisory Private Limited, and 63 Moons Technologies Limited.
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