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program trading
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program trading

In finance, buying and selling a group of shares using a computer program to generate orders automatically whenever there is an appreciable movement in prices.

One form in use in the USA in 1989 was index arbitrage, in which a program traded automatically whenever there was a difference between New York and Chicago prices of an equivalent number of shares. Program trading comprised some 37% of daily trading on the New York Stock Exchange by volume in June 2006, but has been widely criticized for lessening market stability. It was blamed, among other factors, for the Stock Market crashes of 1987 and 1989.
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