Program Trading

DEFINITION of 'Program Trading'

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.

BREAKING DOWN 'Program Trading'

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.

RELATED TERMS
  1. Automatic Execution

    A method of executing trades without inputting them manually. ...
  2. Manual Execution

    A method of trading with the help of a dealer or broker, versus ...
  3. Computer Crime Insurance

    An insurance policy that provides protection from crimes committed ...
  4. Execution

    The completion of a buy or sell order for a security. The execution ...
  5. Flash Trading

    A controversial computerized trading practice offered by some ...
  6. Automatic Reinvestment Plan

    An investment program in which capital gains or other income ...
Related Articles
  1. Active Trading Fundamentals

    The Power Of Program Trades

    Learn how programs make up a significant portion of the volume traded each day.
  2. Trading Systems & Software

    The Pros And Cons Of Automated Trading Systems

    Automated trading systems minimize emotions, allow for faster order entry, lead to greater consistency and resolve pilot-error problems.
  3. Trading Strategies

    The Perils Of Program Trading

    The increasing use of program trading makes market glitches inevitable - and sometimes disastrous.
  4. Stock Analysis

    New Cloud Computing ETF Launches

    Cloud computing has the potential to revolutionize information and data technology, and with the world’s first cloud computing ETF now available, investors have a new way to play this fast-growi ...
  5. Trading Strategies

    Basics of Algorithmic Trading: Concepts and Examples

    Algorithmic trading makes use of computers to trade on a set of predetermined instructions to generate profits more efficiently than human traders.
  6. Forex Education

    Forex Automation Software For Hands-Free Trading

    Automated forex trading software scans the market for favorable trades based on your input. Find out more about this valuable forex tool.
  7. Economics

    What is a Trade Credit?

    Trade credit means that a customer purchases goods from a seller who allows the purchaser to pay for those goods at a later time.
  8. Investing

    Tips For Investors In Volatile Markets

    Find out what to look out for when trading during market instability.
  9. Fundamental Analysis

    From Beads To Binary: The History Of Computing

    Investing today couldn't happen without the inventions of yesterday. Learn more here.
  10. Professionals

    A Day In The Life Of A Day Trader

    Day trading has many advantages and, while we often hear about these perks, it's important to realize that day trading is hard work.
RELATED FAQS
  1. How do financial advisors execute trades?

    Understand how financial advisors normally execute an investor's trades. Learn about the different type of markets and exchanges ... Read Answer >>
  2. What's the difference between a market order and a limit order?

    Buy and sell trades with market orders at the present stock price and execute limit orders if the stock price falls within ... Read Answer >>
  3. Why can't I enter two sell orders on the same stock?

    To answer this question, let's look at a few different situations. You bought a stock for $10 but want to be able to protect ... Read Answer >>
  4. How do I set a strike price in foreign exchange trading?

    Learn about the different order types foreign exchange traders can use to manage positions at certain strike prices and how ... Read Answer >>
  5. What is the downtick-uptick rule on the NYSE?

    To ensure orderly markets, the New York Stock Exchange (NYSE) has a set of restrictions that it can implement when experiencing ... Read Answer >>
  6. How do I place a limit order online?

    Learn how a limit order is placed, the types of stocks it is most useful for and the specifications placed with it to suit ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center