THE IMPACT OF AUTOMATED TRADING SYSTEMS ON FINANCIAL MARKET STABILITY

Violeta Todorović, Aleksandra Pešterac, Nenad Tomić

DOI Number
https://doi.org/10.22190/FUEO1903255T
First page
255
Last page
268

Abstract


The way in which financial markets operate has substantially been changed by the development of information technology. Automation of trading systems in financial markets represents the last phase of depersonalizing activities previously done by traders. Algorithmic trading development enabled computers to determine the moment and the way of executing sales orders. Computers still do not make autonomous decisions regarding the choice of instruments to be traded or trading criteria. They implement the strategy a trader has decided on, choosing a favorable moment. This reduces the impact of human emotions on decision making and enables overcoming possible problems which arise due to neglecting or lack of concentration. High-frequency trading enables the execution of algorithmic operations at a high speed. The main goal of the paper is to determine advantages and dangers produced by algorithmic stock trading.

Keywords

automated trading system, financial markets, high-frequency trading

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References


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DOI: https://doi.org/10.22190/FUEO1903255T

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