May 10, 2019 | AtoZ Markets - According to a new Algo trading market research report, the global algorithmic trading market size is expected to grow from USD 11.1 billion in 2019 to USD 18.8 billion by 2024.
Algo trading market research in a brief
The global algorithmic trading market was observed on the basis of five different market features, including :
- trading types such as Forex, stock markets, exchange trading fund (ETF), bonds, cryptocurrencies. and others (assets, commodities, collateral mortgage, Credit Default Swap (CDS), and Interest Rate Swap (IRS)).
- component-solutions and services
- deployment mode-cloud and on-premises
- enterprise size
According to algo trading market research, the stock markets are expected to grow at a rapid pace in the coming years in the algorithmic trading market.
Stock markets are considered as one of the leading asset classes for trading various kinds of securities in a controlled, secured, and managed environment. Stock markets offer benefits, such as risk management and profit maximization, to brokerage and financial firms. The benefits are paving the way for traders to adopt algorithmic trading.
Algo trading market research from the geographical perspective
North American region is witnessing major developments in the algo trading market and as expected became the largest revenue contributor to the global algorithmic trading market.
Many algorithmic trading solution providers in this region are experimenting in the algo trading market by integrating AI and ML functionalities with their existing algorithmic trading platforms. They are also applying various growth strategies to strengthen their positions in the market.
Major vendors according to algo trading market research
Major vendors in the global algorithmic trading market include Thomson Reuters (US), 63 moons (India), Virtu Financial (US), Software AG (Germany), MetaQuotes Software (Cyprus), Symphony Fintech (India), InfoReach (US), Argo SE(US), Kuberre Systems (US), Tata Consultancy Services (India), QuantCore Capital Management (China), iRageCapital (India), Automated Trading SoftTech (India), Tethys (US), Trading Technologies (US), uTrade (India), Vela (US), and AlgoTrader (Switzerland).
Among component-solutions and services, is expected the growth of the managed services segment with a higher сompound annual growth rate (CAGR) during the forecast period. The algo trading market is segmented based on 2 services’ categories: professional and managed.
The services segment is expected to grow over the forecast period, as the managed services provide traders with support, maintenance, and infrastructure management to effectively develop trading strategies. Vendors in this market offer services to traders or end users so that they can effectively manage and deploy algorithmic trading solutions.
Basics of Algo market trading
Algorithmic trading ( automated trading, black box trading, or trading algorithms) uses a computer program that follows a specific set of instructions (algorithms) for placing a trade.
According to the experts, the emergence of AI and algorithms in the financial services sector will increase the value of the proposal for algorithmic trading and provide opportunities in the algorithmic trading market. It provides a more systematic approach to active trading than methods based on trader intuition or instinct. According to Investopedia, AI application in the trading market provides the following benefits:
- Trades are executed at the best possible prices.
- Trade order placement is instant and accurate.
- Trades are timed correctly and instantly to avoid significant price changes.
- Reduced transaction costs.
- Simultaneous automated checks on multiple market conditions.
- Reduced risk of manual errors when placing trades.
- Backtesting using available historical and real-time data to see if it is a viable trading strategy.
- Reduced possibility of mistakes by human traders based on emotional and psychological factors.
Algo trading is used in the following forms of trading and investment activities:
- purchase of stocks in large quantities by mid- to long-term investors or buy-side firms—pension funds, mutual funds, insurance companies
- short-term traders and sell-side participants—market makers, speculators, and arbitrageurs—benefit from algo-trading execution in creating sufficient liquidity for sellers in the market.
- systematic traders—trend followers, hedge funds, or pairs traders find it much more efficient to apply programmed trading rules and let the program trade automatically.
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