Understanding Algorithmic Trading
The use of algorithms in trading increased after motorized trading systems were introduced in American fiscal requests during the 1970s. In 1976, the New York Stock Exchange introduced the Designated Order Turnaround (DOT) system for routing orders from dealers to specialists on the exchange bottom.
1 In the following decades, exchanges enhanced their capacities to accept electronic trading, and by 2009, overhead of 60 percent of all trades in the U.S. were executed by computers.
Author Michael Lewis brought high - frequency, algorithmic trading to the public’s attention when he published the best- dealing book Flash Boys, which proved the lives of Wall Street dealers and entrepreneurs who helped make the companies that came to define the structure of electronic trading in America.
His book argued that these companies were engaged in an arms race to make ever briskly computers, which could communicate with exchanges ever more snappily, to gain advantage on challengers with speed, using order types which served them to the detriment of average investors.