#NavigatingAlpha2.0

Different market players use algorithmic trading to reduce risk or increase trading efficiency. Institutional investors, such as hedge funds and insurance companies, use algorithmic trading to execute large orders in the market without impacting the prices of the underlying assets. These buy-side firms typically place medium—to long-term market positions.

Short-term traders, such as HFTs (high-frequency traders) and scalpers, use algorithmic trading to take advantage of the rapid execution of orders in the market. Algorithmic trading is also used by systematic traders who wish to trade with fixed entry and exit rules in the market.