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CFA Level 2
Equity Investments

Understanding Algorithmic Trading Benefits

Very Easy Equity Market Structure Algorithmic Trading

In the context of equity markets, algorithmic trading refers to using computer algorithms to execute trades based on predefined criteria. These algorithms can analyze market conditions, determine pricing trends, and often execute trades in milliseconds. Investors use algorithmic trading to take advantage of market inefficiencies, reduce trading costs, and enhance decision-making speed.

Consider the following statements regarding algorithmic trading:

Hint

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