Also called as black-box trading, algorithmic trading follows a specified set of instructions from a computer program for trading. It generates profits so frequently and rapidly that a human trader cannot perform. The rules are defined as per the quantity, timing, price, or mathematical model. Algorithmic trading brings liquidity to the markets and generates profitability for the trader, and it adds a systematic approach to trading without human emotions.
Simply speaking, algorithmic trading completely removes manual intervention. It will conduct point-to-point automation after coding the rules of logic in the algorithm. It tracks the market, places the order when it finds any opportunity, and monitors risk and stop loss. It also squares off the trade when needed. Algorithms can help trade on F&O, equity, FOREX, cryptocurrencies like BITFINEX and BITMEX, and commodities in Indian exchanges like BSE, NSE, NCDEX, MCX etc.