Algorithmic trading has emerged over the past five years to become the dominant channel to market for the largest trading firms, but little is understood about these abstruse execution tools.

They may have sexy names such as "Iceberg", "Dagger", "Guerilla" and "Sniper", but the reality is more prosaic: algorithmic trading is the use of computer-based programmes to manage a trade where the algorithm tracks the market and determines in real time how to execute the trans-action.