68.9k views
3 votes
What does algo trading accomplish?

1) Increase trading speed
2) Reduce human error
3) Improve market liquidity
4) All of the above

User Terry Wang
by
8.4k points

1 Answer

3 votes

Final answer:

Algorithmic trading increases trading speed, reduces human error, and improves market liquidity, making 'All of the above' the correct answer.

Step-by-step explanation:

Algorithmic trading accomplishes several objectives:

  • Increases trading speed by executing transactions at a rate impossible for a human trader.
  • Reduces human error as algorithms follow predefined instructions, leading to a decrease in mistakes caused by emotional or cognitive biases.
  • Improves market liquidity by providing continuous trade flow and narrowing bid-ask spreads due to high-frequency trading activities.

Therefore, the correct answer is 4) All of the above.

User GrapeBaBa
by
8.2k points
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