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Algorithm Usage on the Rise

Traders Magazine Online News, October 31, 2018

The death of the human sales trader has long been predicted but never materialized. And for those who thought algorithmic trading would go the way of the Edsel also will disappointed, according to new research.

In its latest report, market consultancy Credence Research noted that algorithmic trading is still alive and kicking as the basic dynamics of several trading sectors are changing at brisk pace and new technologies such as algorithmic trading are giving a head start to trading institutes and financial organizations. This, they write, is just one of the many several factors acting as a catalyst for the growth of algorithmic trading software. The firm’s own data pegged global algorithmic trading software’s market value at approximately US$1.67 billion in 2017, indicating the growing faith of investors in such software. Based on this, Credence projected growth in software market value to US$26.1 billion through 2026.

To analyze the data and an apples to apples comparison, Credence defines algorithmic trading as an application powered by artificial intelligence and sophisticated algorithm to carry out trading decisions without any human intervention.

Cloud Software Snitching Opportunities from On-premises Software Segment

In 2017, on-premises software for algorithmic trading runs the show by acquiring majority of market share and higher market value. Initially, on-premise software were the only sources an organization could procure such applications. However, introduction and acceptance of cloud concept opened new doors of opportunities not only algorithmic trading but across all the end-use application sector. These software requires minimum infrastructure and provides faster processing compared to its tradition on-premise counterpart. Besides all the aforementioned merits, cost-effectiveness is the biggest driver of cloud algorithmic trading as it allows the company to extract more profits with better flexibility and scalability. All these merits give an upper hand to cloud algorithmic trading and contemplated to overcome on-premise algorithmic trading in coming years.

Boom in Cryptocurrency Brought New Energy in Digital Algorithmic Trading

Algorithmic trading for stock market by far leads the overall segment in terms of market value and expected to continue its good run in coming year. Rising financial literacy attracted more people to invest in stock market. This opened new window of opportunity for software firms to concentrate and develop algorithmic trading tools for stock market considering its nuances and dynamics. Besides stock market commodities including metals, oil & gas, and consumer products also claims a considerable share in overall market. Forex and bonds anticipated growing with a moderate growth rate. However, sudden exponential growth in cryptocurrency trading attracted several software companies to develop application catering to cryptocurrency trading. Consequently, cryptocurrency expected to emerge as the fastest growing segment in terms of market value throughout the forecast period from 2018 to 2026.

Algorithmic Trading Spreading its Wing from Developed Regions to Developing Regions

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