A computerized trading system that
institutional investors use to make large
transactions in
securities while affecting their
prices as little as possible. Algorithmic trading uses complicated mathematical formulas to identify the ideal times to
buy and
sell securities in large batches. Usually, algorithmic trading involves dividing trading a large number of securities as smaller groups so as not to cause
panic buying or
panic selling. Algorithmic trading contrasts with
program trading, which is also a computerized system but does not attempt to minimize price changes. Algorithmic trading is also called black box trading.