Why are trading algorithms allowed?

Algorithmic trading really works for individual traders where there is a fixed strategy while trading and shortage of time to constantly monitor stocks. Anyone can developed “automated trading systems”, which implicitly means “algorithmic trading”.

Algorithmic trading also allows for faster and easier execution of orders , making it attractive for exchanges. In turn, this means that traders and investors can quickly book profits off small changes in price.

These are both examples of completely legal trading tactics that algorithmic systems are well suited for. When executed by a well-programmed ATS, these strategies are safe, legal, and effective.

The Approved FINRA Rule The rule requires all persons to register as “Securities Traders” if they are associated with a FINRA member and are primarily responsible for the design, development, or significant modification of algorithmic trading strategies or are responsible for supervising or directing such activity.