What is meant by program trading

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The following is a quote from a May 6, 2010 article published by Fox Business ("Dow Plunge: Program Trading's Role"): Program trading has been the subject of massive controversy in recent years as many traders and analysts feel it creates dangerous volatility in the market.

Such trading began in the 1970s as trades were manually walked around to specialists' posts. But sophisticated computer systems now allow traders to place trades directly into the exchange computer, increasing the speed of trading exponentially.

a. What is meant by "program trading"?

b. Why do traders use this form of trading?

Reference no: EM131279660

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