program trading

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program trading,

a form of securities trading, also known as index arbitrage. Program traders exploit the price discrepancies between indexes of stocks and futures contracts by using sophisticated computer models to hedge positions. Program trading (also called computer-assisted trading) arose with the advent of computer and telecommunication technologies, whereby trade in different markets could be monitored simultaneously and manipulated accordingly. Because the size of the transactions often caused massive jolts in the stock market, many concluded that program trading was largely responsible for the 500-point drop in the Dow Jones Industrial AverageDow Jones Average,
indicators used to measure and report value changes in representative stock groupings on the New York stock exchange. There are four different averages—industrial stocks, transportation stocks, utility stocks, and a composite average of all three.
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 on Oct. 19, 1987. During the economic recession that followed, the New York Stock Exchange put new restrictions on computerized trading, and many companies refused to do business with any brokerage house that engaged in program trading. With the unprececented growth of the stock market in the later 1990s, program trading saw a resurgence in some trading houses.
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Steve is recognized as one of the strongest program traders on the street and we look forward to the contributions he will make in driving this important business forward," said Forlenza.
The addition of Brocking follows the recent hire of Javier Arrese, from Banco Santander Central Hispano, and John Emmert, from Susquehanna International Group, also as senior global program traders.
The system aggregates multiple sources of FX liquidity into a single access point, which can be tapped via the fast, intuitive LavaFX user interface, or through a FIX API geared towards model and program traders.
Its equity derivatives team ranks among the top five program traders on the New York Stock Exchange.
This flexibility, for example, gives statistical arbitrage and program traders the ability to act swiftly and with ease in mercurial market conditions, particularly as they look to minimize market impact, transaction costs and risk exposure when trading large, multi-sided portfolios.

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