Commercial banks, investment funds, hedge funds, non-bank market makers, and retail traders all use algo trading in financial markets. According to a Coalition Greenwich study, 40% of institutional FX traders used algo trading in 2020 and expect it to increase further in the future.

It is especially important for financial institutions that make market moves. You may have also heard of high-frequency trading (HFT), which has gained popularity in recent years. HFT is a type of algo trading that uses high-frequency data and electronic trading tools to execute large volumes at extremely fast speeds.

Algorithmic trading is utilized by a diverse range of participants in financial markets, including institutional investors, hedge funds, proprietary trading firms, and retail traders. Institutional investors employ algorithms to execute large trades efficiently while minimizing market impact. Hedge funds use algorithms to implement complex trading strategies, such as statistical arbitrage and trend following. Proprietary trading firms leverage algorithms for high-frequency trading, aiming to capitalize on short-term market inefficiencies. Retail traders also use algorithmic trading through automated trading systems and trading bots to execute trades based on predetermined criteria, reducing emotions and improving execution speed. Overall, algorithmic trading appeals to anyone seeking to enhance trading efficiency and performance.