I follow the markets fairly closely but I know very little about algorithmic trading and had a quick question. How exactly markets are able to stay efficient even with the prominence of so many algorithmic trading systems operating on the market at once? For example, it didn't take long for the market to recognize the value of $ZM or to dump $BA despite the indices making new highs and I'm just wondering how exactly algorithmic trading systems are able to still efficiently price these stocks despite the unique factors at play. Is this an error on my part by believing more systems are analyzing price rather than fundamentals and that most of these systems really do analyze fundamental elements of the company. For some reason it seems that if an algorithm is responsible for over 50% of the markets activity you would see more significant errors in the pricing of stocks from a fundamental stand point.
Submitted October 10, 2020 at 04:40PM by OhhhhFriend