Program Trading is a class of Algorithmic Trading. Several sources* report about the overwhelming presence of Algoritmic Trading in modern markets. Program Trading is said to be responsible for around 20% to 30% of the overall markets volume. It is an “under-the-radar” activity performed on the markets by a variety of institutions with billions of dollars of traded money.
Program Trading is known to be active only on major markets with a very large volume traded (some forex majors, equity indexes, selected commodities and large stocks). In these markets, effects of Program Trading can be observed in the structure of price, on all timeframes. This constitutes a market edge: the ability to spot Program Trading footprints on price offers an opportunity to trade with the smart money and setup very profitable, low risk trading plans.
*Sources: Bank for International Settlements, FX-MM, Federal Reserve, E-forex, Tabb Group, CNBC, Carnegie Mellon University, Wall Street Journal, New York Times, The Economist, UK Government Office for Science.
In this section I have collected a number of educational articles relevant to Program Trading, to which I will keep adding in the future:
- Program Trading and trends
- How Program Trading is relevant to my trading (part 1)
- How Program Trading is relevant to my trading (part 2)
- Price disturbances and Program Trading regaining control of a market
I also talk about Program Trading in my interviews I at FXStreet’s Live Analysis Room.
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