The Essay On Algorithmic Trading Systems' Role In Stock Market Efficiency.

Algorithmic Trading System Features

Title: The Role of Algorithmic Trading Systems on Stock Market Efficiency

Automated trading systems utilize algorithmic trading in buying and selling orders on the stock market. The orders are placed based on the strategies and set guidelines programmed within the algorithms. The automated trading systems can accommodate anything from technical analysis to innovative mathematical calculations. Upon completing an automated system, the investors' monitoring can reduce, and the computers execute most of the work (Huang et al. 2019). Although there is still monitoring of the machines to ensure they operate properly. Algorithmic trading is attractive to investors as it eliminates emotions out of trading that are likely to influence the trading strategies. 

           Regarding how they work, the algorithmic trading systems utilize algorithmic that rely on entering and exit instructions from an investor. The algorithmic systems can employ key procedural indicators to develop rigid rules. The trading platforms have various technical indicators for use in the trading tactics that offer investors choices. Similarly, the algorithmic trading systems can use more all-inclusive approaches that call for a deep understanding of a given platform and programming language. For a sophisticated approach, an investor has to closely collaborate with a programmer to create the system based on defined trading tactic. One of the advantages of using automated trading systems is the elimination of emotions in the trading process (Todorovi?, Pešterac, & Tomi?, 2019). The absence of emotions in the trading process is important to traders as they do not make illogical decisions. Also, investors remain focused on their trading approaches set in the algorithm. 

           Seo and Chai (2013) assert that based on the empirical analysis of the Korean stock market, research showed a positive effect of algorithmic trading on the stock market efficacy. The same study found that algorithmic trading plays a role in reducing asymmetric volatility that is a cause of inefficiency in a stock market. Also, algorithmic trading was found to enhance the operational efficiency of a stock market. 

           The involvement of investors directly in trading has been found to lead to illogical decisions due to emotions. As a result, algorithmic trading systems are used to eliminate emotion in the stock markets, which has contributed to efficiency. There is a need to extensively examine algorithmic systems' roles in the stock market to increase efficiency. 

What is the role of algorithmic trading systems on stock market efficiency? 

The study aims to examine algorithmic trading systems' roles in the stock market to increase efficiency. 

This research will use a mixed-methods approach to answer the research question. Quantitatively, the research will use questionnaires to collect data from investors in the stock market. Qualitatively, the research will review relevant secondary sources on the subject to try and answer the research question. 

The research will follow all ethical considerations required for academic research to follow. All participants will consent before they participate in the research, and the information collected will only be used for the study. The integrity and safety of all participants in the research will be highly considered. 

References

Huang, B., Huan, Y., Xu, L. D., Zheng, L., & Zou, Z. (2019). Automated trading systems statistical and machine learning methods and hardware implementation: a survey. Enterprise Information Systems, 13(1), 132-144.

Seo, J. Y., & Chai, S. (2013). The role of algorithmic trading systems on stock market efficiency. Information Systems Frontiers, 15(5), 873-888.

Todorovi?, V., Pešterac, A., & Tomi?, N. (2019). The impact of automated trading systems on financial market stability. Facta Universitatis, Series: Economics and Organization, 255-268.