Algorithmic Trading refers to automated trading systems that use advanced mathematical algorithms to instruct computers on making trade decisions on financial markets. Also referred to as robo trading, black-box trading or algo trading.

In most cases, by using algorithmic trading, the need for human intervention and review of orders to buy or sell securities completely disappears. The mathematical models for computer decision making on stock markets have built-in rules for determining the best time to place orders and start transactions without producing strong effects on share prices.

Algorithmic trading is widely used in investments made by hedge funds and other large institutional investors to deal with high trading volumes on a daily basis. The automated trading models divide large share packages into smaller ones in order to better manage risks, and to reduce the impact on share prices.