Algo Trading works by following a coded strategy or set of instructions written by a trader, analyst, or a quant (quantitative analyst). Once these rules are fed into the trading system, the computer keeps scanning the market data in real time. The moment the conditions match, it places the trade automatically — no human action needed.

For example:

• A simple algo might buy shares of a company if its moving average crosses above a certain level.
  
  
• A more advanced algo might scan for arbitrage opportunities between different exchanges.