Financial Algorithmic Trading And Market Liquidity A Comprehensive Analysis And Trading Strategies

Abstract

Market regulators and practitioners must consider the fluctuations and shifts in market liquidity. The multiplication of algorithmic trading alongside other market improvements has provoked a reexamination of liquidity in NSE recorded organizations. In this paper, we explore how algorithmic traders (ATs) influence the organic market for liquidity in the 30 values that make up the Deutscher Aktien File on the Deutsche Boerse in 2019. 52% of market request volume and 64% of nonmarketable cutoff request volume are comprised of ATs. Contrasted with human traders, ATs effectively screen market liquidity. At the point when liquidity is modest — that is, when offered ask citations are thin — ATs take it in and give it when it is expensive. ATs are bound to begin trading and are less disposed to drop or submit new requests when spreads are low. When spreads are large, ATs respond to events even faster.