Algorithms are the processes computers use to make decisions. They process huge data sets and use advanced mathematics to find patterns and make predictions and decisions based on probability. Algorithms are use in some well-know products and services like google serach and und other. Alogorithms are also used in finance. Financial engineers create alogrithms to analytics buy and sell various goods and financial instuments like stocks, automatically. In the pas 10 years algorithmic trading has become a huge factor in trading. In fact around 75% of the trade in the market today is done by automated systems based on algorithms and only 25% is executed by humans. Algorithm sub change the global investment market. Putting individual investors at a major disadvantage when compared to investment banks and hedge funds. Why? Because automated trading systems have some major advantages over humans. For example algorithmic trading systems are able to process more data faster by taking advantages of a computer's ability to process large amounts of date in a short time. They can compare prices and metrics of millions of financial instrument faster than any human. Another example: Emotions can get in the way of sound investing causing many traders to buy and sell based on emotions like excitement or fear. In contrast algorithmic systems buy and sell only according to predictions and market analysis. Humans also have another major weakness when compared to computer. Reacton time. In the time it takes a human too bleak the algorithms can get informations from around the world. Process and analyze it and then take the appropriate action like buying or selling. Lastly but perhaps most importantly. Algorithms are very efficient when it comes to prove any losses. If it's by calculating risks before execution trades, recognizing dangers in the market or executing tight. Stoploss controls in order to liquidate a position when the risk is calculated as to high. Or if the losses reach a certain defined percentage.