Bob McDowall Senior European Analyst, Tower Group
Bob McDowall Senior European Analyst, Tower Group

What holds the key to mainstream adoption of Algorithmic FX trading?

Bob McDowall discusses the themes of buy-side growth, technology challenges and reducing market resistance that may provide the key to mainstream adoption of Algorithmic trading in FX markets.

First Published: e-Forex Magazine 27 / Under the Microscope / April, 2007

While the growth in electronic trading has stimulated the application of algorithmic trading, it has lead to some abuses of the term as well as the scale and mode of its application, more so perhaps in the context of foreign exchange trading as in any other asset class. In part, this may be explained because the buy-side institutions and proprietary trading groups increasingly demand the ability to develop and customise complex trading strategies in place of ‘off the shelf’ algorithms. ‘They require the ability to access not just multiple markets, but to trade across asset classes, through a range of applications.’This article covers three themes, which are the key to “mainstream adoption of algorithmic trading in FX markets”:1) Reducing market resistance and objections to algorithmic trading? How much resistance there actually is, and the extent to which objections are substantial or emotional, is a matter of debate.2) Buy-side growth. The buy-side including, according...continued

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