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Algo Executing

I say this when I notice that there is an automated, algorithmic computer system executing trades at an important area. Generally, I observe this by watching the DOM (Depth of Market – see below) and how a certain level trades. Algo’s usually have a big order that they seek to fill but they don’t want to show how much is actually out there to prevent adverse movement by the market when it is recognized. For example, if a fund wants to buy 100,000 contracts, it will not just bid that quantity at a given price. It will generally break that order down into small increments and assign a range for the algo to execute. I cannot describe in words how I detect it, but I can do so through the use of a video.

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