Program trading usually refers to securities trades automatically executed according to a computer program or predefined set of stepts. Program trading is usually employed by institutional investors and the trades are usually large in volume including over 15 different securities.

Program trading is usually used to implement portfolio insurance, hedging or arbitrage purposes, which some believe exacerbate market movements. The stock market crash of Black Monday was blamed on program trading.

Related Terms

• Circuit Breaker
• Filter
• Trading Account
• Trading Curb
• Cash Trading
• P Terms

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