According to MarketsandMarkets™, the global algorithmic trading market will be valued at $11.1 billion in 2019, and is projected to grow by a compound annual growth rate (CAGR) of 11.1 percent over the next five years. The research firm expects this figure to hit $18.8 billion by 2024.
Algo trading involves the use of automated programs to follow a set of instructions to perform trades, taking into account factors such as time, price and volume. Such platforms take advantage of artificial intelligence and human intelligence in order to reduce trading costs and help money managers control their business procedures. The main benefit here is not only to maximize the profits but also to control the market risk and the transactions costs.
Among algorithmic trading market applications, the stock markets segment is expected to exhibit the highest growth rate during the forecast period, says the research paper.
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The emergence of AI in the financial service sector and increasing demand for ‘fast, reliable, and effective order execution’ are the major factors aiding in the growth of the global algo trading market. The list of factors fueling the market growth also includes “reducing transaction costs, growing government regulations, and rising demand for market surveillance.”
North America’s dominance to continue
The report further illustrates that the North America market, which accounted for the largest share in 2018, is expected to retain its dominance during the forecasted period (2019-2024). This is due to strong technological advancements and considerable application of algorithm trading in various applications such as banks and financial institutions across the region.
The Asia Pacific is also expected to offer growth opportunities for market players thanks to the rising adoption of algorithmic trading solutions among investment banks, pension funds, and hedge funds.
The latest report on ‘Algorithmic Trading Market by Trading Type’ covers FX, stocks, ETFs, bonds, cryptocurrencies, and other asset classes. It provides analysis of the industry size, revenue forecast and regional spectrum of this business.