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 7.2% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Algorithmic trading refers to the process of using computer algorithms to analyze market data and trends in an automated manner in order to place a high-volume of trades in a short period of time. Algorithmic trading programs can process large amounts of data simultaneously and place trades rapidly, allowing traders to capture small profits on large volumes of shares. This results in fewer transaction costs compared to human traders. Algorithmic trading enables traders to diversify their portfolio, implement complex trading strategies, and trade algorithmically based on real-time data and price movements.
Market key trends:
One of the primary trends in the algorithmic trading market is growing adoption of artificial intelligence and machine learning techniques. AI and machine learning algorithms can analyze huge volumes of historical market data and detect subtle patterns and relationships that may not be obvious to human traders. These technologies help trading algorithms evolve over time based on various trading scenarios, and place highly optimized trades. Additionally, increasing volumes of digital data from various exchanges and platforms has augmented the use of AI and machine learning in algorithmic trading. Growing customer demand for low-latency and high-frequency trading is also driving the algorithmic trading market. Continuous focus on improving infrastructure, reducing processing time, and ensuring fault tolerance has enabled high-frequency trading across major exchanges.
Threat of new entrants: New entrants in the algorithmic trading market need to invest heavily in technological infrastructure and skilled workforce. The established players enjoy economy of scale and have strong customer base.
Bargaining power of buyers: The buyers have moderate bargaining power due to availability of various algorithmic trading solution providers in the market. However, switching costs for buyers are low.
Bargaining power of suppliers: The suppliers have low bargaining power due to availability of various hardware, infrastructure and technology providers in this market.
Threat of new substitutes: There is low threat of substitution as algorithmic trading provides unique advantages of speed, low latency transactions and network connectivity that are difficult to be replicated.
Competitive rivalry: The algorithmic trading market is highly competitive due to presence of established global as well as local solution providers.
The global Algorithmic Trading Market is expected to witness high growth, exhibiting CAGR of 7.2% over the forecast period, due to increasing demand for quantitative trading by institutional investors and hedge funds.
The market size for algorithmic trading in 2023 is US$ 2.18 Bn. North America region accounted for largest share of the global market in 2021 majorly attributed to high presence of financial intermediaries, investment banks, hedge funds and growth institutional investors based in the US and Canada.
Key players operating in the Algorithmic Trading market are 63 Moons Technologies Limited, MetaQuotes Software Corp., Algo Trader AG, Refinitiv Ltd, and Virtu Financial Inc. 63 Moons Technologies Limited provides trading technology tools and solutions specifically engineered for real-time markets including algorithmic trading. MetaQuotes Software Corp. offers a wide range of solutions for algorithmic trading including MetaTrader 4 and MetaTrader 5 trading platforms
- Source: Coherent Market Insights, Public sources, Desk research
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