Algorithmic Trading
Market Microstructure glossary · Market Microstructure Fundamentals
Definition
The use of computer programs to make and route trading decisions according to predefined rules, often to slice large parent orders into smaller children for execution.
Algorithmic Trading in plain English
Algorithmic trading just means letting a computer program follow pre-written rules to decide what to trade and where to send it, instead of a human clicking each time. A key job is chopping one giant order (the 'parent') into many small pieces (the 'children') and feeding them in gradually, like buying concert tickets a few at a time so you don't spike the price by grabbing them all at once. The computer can do this in milliseconds across many venues, which humans can't match. The goal is usually a better average price and less market disruption, not magic profits.
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