One common user of algo trading are institutional investors, also called "buy side firms". One reason why these large market players use algo trading is because of their large quantity purchases. When large purchases are made in the markets, the price of an asset can be affected in an unintended way. Algo trading can be used to break up a purchase into small pieces so the price of an asset is less affected than if you bought it in one single piece.
Another type of algo trader is a long-term trader. Long term traders use the algorithms to trade within their predetermined guidelines, e.g., trend following. The algorithmic trading has cost saving benefits compared to not having automation.
The last type of algorithmic trader is a short-term trader. Short-term traders can also be called "market makers", as they look to take advantage of short-term market inefficiencies. These inefficiencies, such as index arbitrage, create the by-product of liquidity in the market, thus their term "market makers".
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