Translation: Algorithmic Trading = Algorithmic Trading
Algorithmic trading (Algorithmic Trading) is the use of advanced computer programs and systems based on predetermined algorithms and mathematical rules to execute buy and sell orders in the financial market with exceptional speed and automatically, without direct human intervention in every trade.


Simplified definition:

It is very similar to an "automatic buying" system or a smart assistant that carries out precise instructions on your behalf. Instead of monitoring the stock and pressing the buy or sell button yourself, the program monitors the market and executes the trade as soon as certain conditions are met, such as reaching a specified price or volume, within fractions of a second.


Note:

Algorithmic trading does not mean that it is merely a tool for random speculation. It is used to improve market efficiency and execute large orders efficiently, but it may require regulatory controls and rules, such as those proposed by the Capital Market Authority, to prevent disruptions or sharp volatility in the market.


Example:

Suppose a fund or institutional investor wants to buy one million shares of a listed company. If this order were placed all at once, it could cause a sharp and sudden increase in the share price. Instead, the algorithmic trader uses a program that divides the large order into thousands of smaller orders and distributes their execution throughout the trading day based on liquidity and market movement, for example, sending only 20 orders per minute or hour in accordance with the controls.


What does this mean for you?

  • Speed and efficiency of execution: Algorithmic trading helps complete trades extremely quickly and reduce costs associated with price spreads.
  • Protecting market stability: Establishing controls and maximum order rates, such as the limit proposed by the Capital Market Authority of 20 orders per day per security, prevents sudden pressure or disruptions that could harm investors.
  • Enhancing investor confidence: Regulating this trading ensures a fair and sound trading environment that protects all participants in the financial market.

Frequently asked question: Is algorithmic trading available to all traders in the same way?
Answer: No. Although some forms are available to individuals through brokerage tools, the vast majority are managed by financial market institutions and large investment funds that possess the infrastructure and approved monitoring systems required to execute them in accordance with official laws and regulations.