Program Trading vs Algorithmic Trading.

Welcome to the secret world of program trading.

What is Program Trading?

Program trading Is a type of trading in securities usually consisting of baskets of fifteen stocks or more that are executed by a computer program simultaneously. And based on predetermined conditions.

The most common of these conditions is a portfolio shift used by mutual funds. As mutual funds receives more money, they use that money to buy more multiple stocks on which the fund is based. They buy all of those stocks at the same time.

The second most common of those conditions is the use of the change in the S&P 500 Premium. The S&P 500 Premium is normally used by program trading firms and hedge funds. And not only with stocks but also with commodity futures contracts.

Program trading is over 90% of the volume every day.

What is Algorithmic Trading?

Algorithmic trading is a method of executing orders using pre-programmed trading instructions automatically. And accounting for variables such as price and volume. This type of trading attempts to leverage the speed and computational resources of computers relative to human traders. Since 2020, algorithmic trading has been used more and more with both retail and institutional traders. It is widely used by investment banks, hedge funds and mutual funds that need to spread out the execution of a larger stock order.

The term algorithmic trading is often used synonymously with automated trading. These use a variety of program trading strategies. Some of which are based on formulas and results from mathematical finance. And they often rely on specialized software.

Thank you for your interest in Program Trading and Algorithmic Trading.

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