The simultaneous purchase and sale of many different stocks, or of stocks and related futures contracts, with the use of a computer program to exploit price differences in different markets.
- The SEC has already moved, in conjunction with the New York Stock Exchange, to close down computer program trading on the market, a trade related to stock index futures.
- Other tactics involve deep leveraging, programme trading, swaps, arbitrage and derivatives that retail investors find difficult to master.
- Algorithms are a step up from the more familiar program trading, which institutions for years have used to buy or sell bundles of 15 or more stocks worth a combined $1 million.
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