[ A L G O R I T H M I C T R A D I N G S U R V E Y ] best execution, reduce market impact and navigate increasingly complex multi-asset workflows, the ability of a smaller number of trusted, high-performing providers to meet the full breadth of execution needs is becoming a more compelling proposition.
Use of algorithms by value traded Algo adoption by value traded has accelerated sharply over recent years, with the proportion of hedge funds using algorithms to execute more than half of their traded value rising by almost 24 % since 2023, reaching close to 70 % in this year’ s survey and underscoring a structural and sustained shift in how the buy-side approaches execution( Figure 5). Continuing the trend, the largest increase occurred with those respondents trading more than 80 % of value doubling the growth to 8 % year-over-year in 2026 from 4 % in 2025. Looking at the other end of the scale, respondents’ executing 50 % or less via algorithms has dropped by almost 28 % since 2023, now totaling just 24.41 % overall.
Figure 5: Algorithm usage by value traded(% of responses) |
Percentage of respondents |
2026 |
2025 |
2024 |
Not answered |
6.30 |
7.33 |
6.67 |
0- 5 % |
2.36 |
4.00 |
5.33 |
5- 10 % |
3.15 |
6.00 |
4.67 |
10- 20 % |
2.36 |
2.67 |
6.67 |
20- 30 % |
6.30 |
4.00 |
6.67 |
30- 40 % |
5.51 |
6.67 |
4.00 |
40- 50 % |
4.72 |
6.67 |
7.33 |
50- 60 % |
8.66 |
11.33 |
12.67 |
60- 70 % |
12.60 |
9.33 |
6.67 |
70- 80 % |
7.09 |
9.33 |
10.67 |
> 80 % |
40.94 |
32.67 |
28.67 |
Figure 6: Types of algorithms used(% of responses) |
Algo type |
2026 |
2025 |
2024 |
VWAP |
83.46 |
74.00 |
74.67 |
Dark liquidity seeking |
74.80 |
68.00 |
74.00 |
% Volume( participation) |
68.50 |
66.67 |
62.00 |
Target Close / Auction Algos |
57.48 |
48.67 |
54.67 |
TWAP |
47.24 |
42.00 |
45.33 |
Implementation shortfall( single stock) |
42.52 |
46.67 |
44.00 |
Implementation shortfall( basket) |
27.56 |
24.67 |
20.67 |
Other |
3.94 |
8.00 |
5.33 |
Diversity in execution algorithms Examining the types of algorithms used by hedge fund managers, VWAP, dark liquidity seeking and % volume( participation) retained their positions as the top three strategies in 2026, consolidating their positions by 9.46 %, 6.80 % and 1.84 % respectively( Figure 6). A surge of 9.46 % in VWAP usage cements its position as the dominant strategy by some distance. The use of target close / auction algos represents the second highest uptick, increasing by 8.81 % year-on-year. The growth in VWAP reflects its enduring appeal for intraday market impact management, while the rise of target close / auction algos speaks to growing structural demand from passive and index-linked strategies increasingly seeking end-of-day price benchmarks. At the other end of the spectrum, implementation shortfall( single stock) fell by 4.15 % year-on-year. The decline in single-stock IS may not signal a loss of confidence in the IS methodology itself, but rather a shift in how it is being applied, with hedge funds increasingly favouring portfoliolevel implementation shortfall over a stock-by-stock approach, reflecting the growing complexity of their execution workflows. When asked which additional features they would like from providers, traders want smarter algorithms and better access to alternative liquidity sources. On the algo side, respondents called for smarter tools incorporating auction participation, advanced close algorithms and dedicated pairs trading functionality with spread limit controls. On the liquidity side, demand focused on broader access to ELPs and SIs, improved block-finding in dark venues and private rooms with trajectory crossing. The common theme is a desire for brokers to source liquidity more discreetly and execute more efficiently at key points in the trading day.
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