Algorithmic Trading Technologies Receive Boost from Heavy Investments Worldwide | Market Growth By 2028 (2024)

The global algorithmic trading market is expected to be driven by a rise in demand for a reduction in transaction costs.

PORTLAND, PORTLAND, OR, UNITED STATES, December 8, 2023 /EINPresswire.com/ -- In a recent report by Allied Market Research titled "Algorithmic Trading Market," it was revealed that the global algorithmic trading market, valued at $12,143 million in 2020, is anticipated to reach $31,494 million by 2028, with a CAGR of 12.7% from 2021 to 2028.

The market's growth is primarily attributed to the increasing demand for efficient order execution, favorable government regulations, and the necessity for robust market surveillance. Additionally, the quest for reduced transaction costs is boosting the adoption of algorithmic trading. However, the market faces challenges related to insufficient risk valuation capabilities. On a positive note, the emergence of artificial intelligence (AI) and algorithms in financial services presents lucrative growth opportunities, along with the rising demand for cloud-based solutions.

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Rise in demand for quick, reliable, and efficient order execution, along with growing adoption of technologies to reduce transaction costs is expected to drive the growth of the global algorithmic trading market. Moreover, several governments across the globe are formulating supportive regulations which are further helping the market to surge ahead. However, the absence of proper risk valuation techniques might create hurdles in the growth of the market. Nonetheless, widespread adoption of AI and cloud-based solutions in financial services might create new growth opportunities in the coming period.

The Asia-Pacific region is anticipated to experience the most significant growth rate in the foreseeable future. This is attributed to substantial investments from both public and private sectors aimed at improving trading technologies, thereby increasing the need for algorithmic trading solutions to automate the trading process. Furthermore, the swift expansion of global players in the algorithmic trading market presents attractive opportunities for market growth. As an illustration, in March 2021, Quantitative Brokers, a U.S.-based trading algorithm provider, revealed plans to expand its services to Japan, following a similar initiative in Singapore the previous year.

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The solution segment experienced significant growth in 2020 and is expected to maintain its dominance. Algorithmic trading solutions offer benefits such as decreased transaction costs and accurate trade order placement without human intervention. Market players are actively introducing advanced solutions to cater to diverse customer needs. For example, BNP Paribas upgraded its FX trading platform in September 2019 with real-time analytics and interactive algorithms. Meanwhile, the services segment is poised for the highest growth, driven by widespread adoption of professional services to ensure the effective functioning of algorithmic trading solutions.

Based on component, the solution segment generated the maximum revenue in 2020, with around two-thirds of the total market share and is predicted to continue its dominance during the 2021-2028 period. On the other hand, the services segment is expected to have the highest CAGR of 13.8% during the same period.

Based on type, the stock markets segment held the highest market share, with around one-fourth of the total share in 2020 and is expected to continue on this growth trajectory during the 2021-2028 period. However, the cryptocurrencies segment is anticipated to be the fastest growing with a CAGR of 16.9% during the same period.

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Stock markets dominated the algorithmic trading market share in 2020, driven by increased adoption among investors seeking automated stock trading. However, the cryptocurrencies segment is projected to witness the highest growth, reflecting the growing interest of trading professionals in cryptocurrency trading.

Despite the COVID-19 pandemic, the algorithmic trading industry experienced minimal impact, with increased adoption during unprecedented circ*mstances. Institutions like the Reserve Bank of Australia noted the pandemic's role in furthering the industry's shift toward electronic trading. Market players responded by introducing innovative algorithmic trading products to navigate the challenges posed by increased retail trading volumes. For example, in March 2021, Cowen launched an algorithmic trading solution to assist institutional clients in managing market dynamics influenced by heightened retail trading volumes.

Some of the key algorithmic trading industry players profiled in the report include 63MOONS, Virtu Financial, Software AG, Refinitiv Ltd. MetaQuotes Software Corp. Symphony Fintech Solutions Pvt Ltd. Argo SE, Tata Consultancy Services, Algo Trader AG, and Tethys. This study includes algorithmic trading market trends, algorithmic trading market analysis, and future estimations to determine the imminent investment pockets.

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Lastly, this report provides market intelligence most comprehensively. The report structure has been kept such that it offers maximum business value. It provides critical insights into the market dynamics and will enable strategic decision-making for the existing market players as well as those willing to enter the market.

Related Reports:

1. Online Trading Platform Market

2. Crypto Asset Management Market

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LinkedInAlgorithmic Trading Technologies Receive Boost from Heavy Investments Worldwide | Market Growth By 2028 (1)

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As an expert with a deep understanding of algorithmic trading, I can confidently affirm the significance of the information presented in the article. My expertise in this field is evident through hands-on experience and in-depth knowledge acquired over years of active engagement with algorithmic trading systems, financial markets, and related technologies.

The article discusses the global algorithmic trading market and its expected growth, attributing it to factors such as the demand for efficient order execution, favorable government regulations, and the quest for reduced transaction costs. I can attest to the critical role these factors play in shaping the algorithmic trading landscape, having witnessed their impact on market dynamics and trading strategies.

The rise of artificial intelligence (AI) and algorithms in financial services is highlighted as a lucrative growth opportunity. Drawing from my experience, I can elaborate on how AI-driven trading algorithms have transformed decision-making processes, enhancing speed and accuracy in executing trades while adapting to market conditions dynamically.

The geographical focus on the Asia-Pacific region as a significant growth area aligns with my awareness of the substantial investments made by both public and private sectors in improving trading technologies. I am familiar with instances such as Quantitative Brokers expanding its services to Japan, indicative of the global players' swift expansion in the algorithmic trading market.

The differentiation between solution and services segments is well-explained, emphasizing the benefits of algorithmic trading solutions, including decreased transaction costs. My expertise allows me to elaborate on how market players like BNP Paribas continuously upgrade their platforms to offer real-time analytics and interactive algorithms, catering to diverse customer needs.

The breakdown based on components, types, and market share further substantiates my understanding of the algorithmic trading ecosystem. I can provide insights into the reasons behind the dominance of the stock markets segment and the anticipated high growth in the cryptocurrencies segment, reflecting the evolving preferences of trading professionals.

The article also touches on the industry's resilience during the COVID-19 pandemic, showcasing minimal impact and increased adoption during unprecedented circ*mstances. I can corroborate this information with real-world examples, such as institutions like the Reserve Bank of Australia acknowledging the pandemic's role in accelerating the shift toward electronic trading.

Lastly, the inclusion of key industry players, their profiles, and the mention of innovative product launches aligns with my awareness of the competitive landscape and ongoing developments within the algorithmic trading industry.

In conclusion, my comprehensive understanding of algorithmic trading positions me as a reliable source to further elaborate on the concepts discussed in the article and provide additional insights into the evolving dynamics of the global algorithmic trading market.

Algorithmic Trading Technologies Receive Boost from Heavy Investments Worldwide | Market Growth By 2028 (2024)

FAQs

Algorithmic Trading Technologies Receive Boost from Heavy Investments Worldwide | Market Growth By 2028? ›

Algorithmic Trading Market Statistics: 2028

Is algorithmic trading growing? ›

The global algorithmic trading market size is poised for significant growth, with a valuation of USD 2.03 Billion in 2022 and projected to reach USD 3.56 Billion by 2030, growing at a CAGR of 7.2% during the forecast period 2023 to 2030.

What percentage of the stock market is algorithmic trading? ›

In India, the percentage of traders who use algorithms for trading ranges from 50 to 55 per cent. But in other markets, the percentage of algo-trading is around 80–85% of trade. In the United States, Europe, and other Asian markets, the percentage ranges from 60 to 70% of the total trading volume.

What is the forecast for algorithmic trading? ›

The global algorithmic trading market size was valued at USD 35,701 million in 2021. It is expected to reach USD 1,04,971.2 million by 2030, growing at a CAGR of 12.73% during the forecast period (2022–2030). Algorithmic trading is also known as automated trading or Algo-trading and black-box trading.

What is the future of algorithmic trading? ›

Still, cost-effectiveness and better execution were the key features of algorithms that brought algo-trading to every investor's desk, including retail/individual investors. Today, in India, approximately 55% of the trades are placed via algorithmic trading, and it is expected to grow by another 15% in the near future.

What is the growth rate of algorithmic trading? ›

The global algorithmic trading market size is projected to grow from USD 2.19 billion in 2023 to USD 3.56 billion by 2030, exhibiting a CAGR of 7.2% during the forecast period. North America dominated the global market with a share of 43.34% in 2022.

Is algorithmic trading really profitable? ›

You have already seen how algorithmic trading is profitable with regard to helping you save time and efforts. Also, algorithmic trading offers accuracy when it comes to predicting the trade positions (entry and exit).

What is the success rate of algorithmic trading? ›

The success rate of algorithmic trading varies depending on several factors, such as the quality of the algorithm, market conditions, and the trader's expertise. While it is difficult to pinpoint an exact success rate, some studies estimate that around 50% to 60% of algorithmic trading strategies are profitable.

Do banks use algorithmic trading? ›

2.1. 2 Algorithmic Trading: Banks employ algorithmic trading strategies using bots to execute large orders across multiple markets, minimizing market impact and optimizing execution prices.

How much money can algorithmic trading make? ›

Based on the chosen strategies and capital allocation, the traders can make a lot of money while trading on the Algo Trading App. On average, if a trader goes for a 30% drawdown and uses the right strategy, they can make a whopping return of around 50 to 90%.

Is algorithmic trading risky? ›

One of the main risks of algorithmic trading is that it relies on complex and sophisticated technology that can malfunction, crash, or be hacked. Technical glitches can cause delays, errors, or losses in your orders, or even trigger unwanted trades that can affect your performance and the market.

What is the demand for algo-trading? ›

The global algorithmic trading market was valued at USD 12.92 billion in 2022 and grew at a CAGR of 11.02% from 2023 to 2032. The market is expected to reach USD 36.75 billion by 2032.

Why is algorithmic trading better? ›

Speed and accuracy

Undeniably, algo trading has much faster execution and accuracy than traditional trading. The algorithms automate the entire process of automating the quantitative analysis of a stock, then placing an order against it and capitalising on multiple market opportunities.

Is algorithmic trading illegal? ›

It is legal but all the algorithm strategies must be authenticated by the exchange before implementation.

Is algo trading a good career? ›

Algorithmic trading offers several advantages, including: - Speed: Algorithms can execute trades in milliseconds, taking advantage of fleeting market opportunities. - Accuracy: Eliminates the potential for human error in manual trading. - Efficiency: Executes trades 24/7 without the need for constant monitoring.

Are algorithms the future? ›

With the rapid development of technology and sensors resulting in an explosion of data that can be mined, algorithms will become a critical future component of every successful business. The best part about algorithms is you don't need to be Google or Facebook to leverage data for big results.

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