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Program Trading
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Computerized trading used primarily by institutional investors typically for large-Volume trades.
Orders from the trader's computer are entered directly into the market's computer system and executed automatically. In recent times, there has been a subset of Program trading called Algorithmic trading. This is when a computer program takes a large order, breaks it up into small pieces (typically 100-300 shares per piece), and gradually submits these pieces to the market. The goal is to complete the order without other market participants realizing that a large trade is in progress, because they would change their behavior (and thus the price) to the detriment of the program trader if they recognized a large trade.
Program trades are usually executed if index prices sink or rise to a certain level. This tends to create very volatile situations. As a result, there are restrictions on times when Program trading can be used.
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Privatebanking.com
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