# Algorithmic Trading

*Trading & Technical Analysis — Finicade finance glossary*

Algorithmic trading executes rules automatically, from simple order-slicing to fully systematic strategies. Most institutional volume is now executed this way, primarily to reduce market impact rather than to predict direction. Its defining risks are the ones code introduces: an untested edge case cost Knight Capital $440m in 45 minutes and its independence shortly after.

**Also known as:** algo trading, systematic trading, automated trading

**Related terms:** [VWAP](https://finicade.com/glossary/vwap), [TWAP](https://finicade.com/glossary/twap), [High-Frequency Trading](https://finicade.com/glossary/high-frequency-trading), [Backtesting](https://finicade.com/glossary/backtesting), [Overfitting](https://finicade.com/glossary/overfitting)

Source: https://finicade.com/glossary/algorithmic-trading