What is algorithmic trading?

What it means

The defining property is that the rules are fixed in advance and applied identically every time. This eliminates the largest source of retail underperformance — inconsistent execution of a plan — and replaces it with a different problem, which is that a bad rule is now applied perfectly and tirelessly.

Why it matters

It is not a synonym for high-frequency trading, and it does not require artificial intelligence. Most retail algorithmic trading is a modest set of conditional rules running on a desktop platform, which is exactly what an Expert Advisor is.

What this changes in practice

The honest framing of the benefit is narrow but real: an algorithm will take the trade at 3am, will not widen a stop because it feels confident, and will stop for the day when the loss limit is reached. Whether that produces profit depends entirely on whether the rules have an edge — see are trading bots profitable.