A Study on Awareness of Algorithmic Trading and Its Impact on Trading Profitability among Investors

Abstract

The rapid advancement of financial technology has significantly transformed the functioning of financial markets, particularly through the adoption of algorithmic trading systems. Algorithmic trading allows investors to execute trades automatically based on predefined rules, advanced computational models, and real-time market data. With the increasing use of technology in trading activities, awareness of algorithmic trading among investors has become an important factor influencing trading decisions and financial performance. The present study examines the level of awareness of algorithmic trading dimensions among investors and analyzes its relationship with trading profitability.

The study considers four key dimensions of algorithmic trading awareness, namely Technology and Infrastructure, Trading Strategy and Algorithmic Systems, Market Data and Information, and Skill and Knowledge. The study is based on primary data collected from 100 investors and employs statistical techniques to analyze the data. The findings reveal that there is a significant difference in the awareness levels of algorithmic trading dimensions among investors. The results also indicate a positive and significant relationship between awareness of algorithmic trading components and trading profitability. The study highlights that investors with higher levels of technological knowledge, access to market information, and algorithmic trading skills tend to achieve better trading outcomes.