Orders requiring the execution of trades in a large number of different stocks at as near the same time as possible. Also called basket trades. Related: Block trade
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A large trade executed automatically by a computer on behalf of institutional investors. Program trades are usually open orders in which the computer is programmed to wait until a certain price prevails before buying or selling a large quantity of securities. Because of the large number involved, program trading may lead to increased market volatility; because of this, program trading has been blamed for the 1987 Stock Market Crash, selling automatically as prices were reached, making the problem worse. Exchanges now limit the times when program trades may occur to prevent a recurrence. Program trading is also called basket trading. See also: Algorithmic trading.
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