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Algorithmic Trading or Algo Trading refers to triggering trades on stock exchanges based on predefined criteria and without any human interference using computer programs and software [14]. Algorithmic Trading is normally defined as the use of computer algorithms to mechanically make certain orders, trading decisions, and manage those orders after compliance. While being a division of algorithmic trading, high-frequency trading involves buying and selling oodles of shares in a very small period of time like fractions of seconds. After so many frauds and downturns in stock market, the common agreement is that algorithmic trading is an unavoidable evolution of the trading process and markets all over the world have implemented various measures to provide a unhampered experience to investors. In the United States and other such developed stock markets, High-Frequency Algorithmic trading accounts for about 70% of trades in equities segment. In India, this percentage of trades done with the help of algorithmic trading to the total turnover has moved up to as much as 49.8%.

In India, Algo Trading was introduced on April 3, 2008, when DMA (Direct Market Access) facility was made available to institutional clients by SEBI (Securities and Exchange Board of India). DMA facility was a platform which allowed brokers to provide their set up to clients and gave them direct right to use to the exchange trading system without any participation of a broker. To start with retail, clients were not given this facility; thus, only institutional clients could avail this service. But later, it was also given to retail-individual traders. It brought down the costs of trading for the institutional investors and also helped in improved execution by reducing the time spent in steering the order to the broker and issuing the necessary commands. But DMA had a negative effect on the brokerage business of stock brokers as investors both institutional and retail clients start accessing DMA services. To sustain the times, they started providing computerized software to the clients.