Algorithm

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DEFINITION of 'Algorithm'

A set of rules for accomplishing a task in a certain number of steps. One common example is a recipe, which is an algorithm for preparing a meal. Algorithms are essential for computers to process information. As such, they have become central to our daily lives, whether ordering a book online, making an airline reservation or using a search engine.

INVESTOPEDIA EXPLAINS 'Algorithm'

Algorithms are now used throughout the financial world in areas like loan pricing, stock trading and asset-liability management. For example, algorithmic trading, known as "algo," is used for deciding the timing, pricing and quantity of stock orders.

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