Algorithmic Trading Market Analysis: Strategies and Technologies Shaping the Future 2028

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, May 23, 2024 /EINPresswire.com/ -- According to a recent report published by Allied Market Research, titled, “Algorithmic Trading Market by Component, Type, Deployment Mode, Type of Traders, and Region: Global Opportunity Analysis and Industry Forecast, 2021-2028,” the global algorithmic trading market size was valued at $12,143 million in 2020, and is projected to reach $31,494 million by 2028, registering a CAGR of 12.7% from 2021 to 2028.

Algorithmic trading, also known as algo trading, refers to the use of computer algorithms to automate the process of buying and selling financial instruments in the market. These algorithms are designed to follow specific sets of rules and criteria, such as timing, price, quantity, or any mathematical model, to execute trades at speeds and frequencies that would be impossible for a human trader.

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The growth of the global algorithmic trading market is mainly driven by factors such as rise in demand for reliable, fast, and effective order execution; the emergence of favorable government regulations; and the need for market surveillance. In addition, rise in demand for reducing transaction costs fuels the demand for algorithmic trading. However, insufficient risk valuation capabilities may hamper the market growth to some extent.

On the other hand, emergence of AI and algorithms in financial services is expected to provide lucrative opportunities for market growth during the forecast period. In addition, rise in demand for cloud-based solutions is anticipated to be opportunistic for the market growth during the forecast period.

In 2020, the solution segment exhibited the highest growth in the algorithmic trading market share, and is expected to maintain its dominance in the upcoming years, as the algorithmic trading solutions provides several benefits such as reduced transaction costs due to lack of human intervention and instant and accurate trade order placement. In addition, the market players are introducing advanced algorithmic trading solutions to serve the various needs of their customers.

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For instance, in September 2019, BNP Paribas introduced an upgraded FX trading platform with real-time analytics and interactive algorithms. However, the services segment is expected to witness the highest growth, due to the extensive adoption of professional services among end users, as it ensures effective functioning of algorithmic trading solution throughout the process.

By type, the global algorithmic trading market share was dominated by the stock markets segment in 2020, and is expected to maintain its dominance in the upcoming years, due to increase in adoption of algorithmic trading solutions by investors to trade stocks as it operates through a computer program without a need for human interventions. However, the cryptocurrencies segment is expected to witness the highest growth, owing to rise in interest of trading professionals toward crypto-currency trading.

Based on components, 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 region, the North America algorithmic trading market accounted for the highest market share in 2020 with around two-fifths of the total revenue and is expected to maintain its leadership status by 2028. However, the market in Asia-Pacific is expected to have the fastest CAGR of 15.3% during the analysis timeframe.

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The current estimation of 2028 is projected to be higher than pre-COVID-19 estimates. The COVID-19 outbreak has low impact on the growth of the algorithmic trading industry, as the algorithmic trading adoption have increased in the face of unprecedented circumstances. For instance, Reserve Bank of Australia, in its recent publication stated that the COVID-19 pandemic may have only furthered the industry's shift toward electronic trading.

In addition, the market players have introduced innovative algorithmic trading products during the pandemic to ensure better serving the increased volumes of   trading. This factor drives the algorithmic trading market growth. For instance, in March 2021, Cowen, an American multinational independent investment bank and financial services company launched an algorithmic trading solution to help institutional clients navigate market dynamics caused by increased volumes of retail trading.

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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