Algorithmic Trading is the practice of designing trading strategies based on technical indicators, and implements such strategies with computer software, which applies the various algorithms and carries out the trades by deciding the buy/sell operation, time, price and quantity, etc.
The advantages include:
Large orders can be split into small orders, avoiding to move the market.
Easier execution when there is a sudden surge or drop of the prices.
Rational decisions to limit losses and to limit wins.
Simultaneous trading through multiple accounts.
Fully automated operation, no need for constant monitoring of the market by a human being.
There are a number of disadvantages as well.
When a certain strategy becomes widely used, the effectiveness will be diminished. Many trading parties will be executing the same trades, making trades difficult or impossible.
A a breakout or a pullback may prove to be false or short-lived. In these situations the trading strategy may incur loses.
The overall trend of the market is not reflected into most trading strategies, manual interventions may be needed if related adjustments are desired.
Algorithmic trading offers great advantages, but it is not a way to make money with your eyes completely blindfolded. The best result will be achieved through the careful combination of algorithmic trading and human judgments.