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| Algorithmic Trading Market |
Algorithmic trading or automated trading is a trading system that uses computers programmed to change orders, execute trades and make decisions autonomously based on signals from public/private market data and quantitative models. Algorithmic trading is widely used by investment banks, pension funds, mutual funds and other large institutional investors to divide large trades into several smaller trades to manage market impact and risk. Algorithmic trading incorporates advanced techniques such as artificial intelligence, machine learning, natural language processing, and neural networks. These sophisticated strategies allow algorithmic trading to identify trading opportunities and execute trades in fractions of a second, much faster than human traders.
The global
Algorithmic Trading Market is estimated to be valued at US$ 2.18 Bn in 2023 and is expected to exhibit a CAGR of 5.5% over the forecast period
2023 to 2030, as highlighted in a new report published by Coherent Market
Insights.
Market key trends: Development of advanced analytic techniques such as artificial
intelligence and machine learning is driving growth of the algorithmic trading
market. AI and machine learning systems can analyze huge amounts of market
data, recognize complex patterns of behavior and eliminate human biases and
errors from the decision making process. These advanced technologies help
algorithms execute trades based on real-time data which leads to higher
returns. Moreover, AI and machine learning powered algorithms require less
human supervision and can learn and improve decisions independently leading to
cost savings. Growing adoption of AI and machine learning technologies is
expected to accelerate growth of the global algorithmic trading market during
the forecast period.
Segment Analysis
The global algorithmic trading market is dominated by the cloud-based segment
which accounts for around 60% of the overall market share. This is because
cloud-based algorithmic trading platforms offer numerous advantages to
financial institutions like low upfront cost, scalability, flexibility and easy
deployment. It also allows traders to access their trading algorithms from
anywhere. Within the cloud segment, infrastructure as a service (IaaS)
dominates over software as a service (SaaS) as it provides greater flexibility
and control to customize the infrastructure.
Key Takeaways
The global Algorithmic
Trading Market Growth is expected to witness high growth over the
forecast period driven by rapid technological advancements in the FinTech
industry. Factors such as increasing volumes of online transactions, growing
digitalization of payment solutions, and proliferation of artificial
intelligence and big data analytics are expected to spur the adoption of
automated trading strategies. The global Algorithmic Trading Market is
estimated to be valued at US$ 2.18 Bn in 2023 and is expected to exhibit a CAGR
of 5.5% over the forecast period 2023 to 2030.
Regional analysis
North America currently leads the global algorithmic trading market with the
United States accounting for the major share. This is attributed to strong
presence of financial institutions that are early adopters of new technologies.
Growing volumes of cross-border trades are also driving the implementation of
algorithmic trading platforms in the region. The Asia Pacific region is expected
to witness the highest growth over the next few years on account of rapid
digitization of financial services in countries like China and India.
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