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KEY TAKEAWAYS
- Algorithmic trading is the use of process- and rules-based algorithms to employ strategies for executing trades.
- It has grown significantly in popularity since the early 1980s and is used by institutional investors and large trading firms for a variety of purposes.
- While it provides advantages, such as faster execution time and reduced costs, algorithmic trading can also exacerbate the market's negative tendencies by causing flash crashes and immediate loss of liquidity.