Role of Technology in Modern Trading (Algo Trading, AI, etc.) MCQs

1. Algorithmic trading is also known as:
(A) Manual trading
(B) Program trading
(C) Traditional trading
(D) Offline trading

2. The primary goal of algorithmic trading is to:
(A) Increase human involvement
(B) Automate trade execution
(C) Reduce computer usage
(D) Eliminate financial markets

3. High-Frequency Trading (HFT) is characterized by:
(A) Slow execution
(B) Extremely fast execution
(C) Manual order placement
(D) No use of technology

4. Which technology helps in predicting stock trends using large datasets?
(A) Blockchain
(B) Artificial Intelligence
(C) Printing Press
(D) None of the above

5. Machine Learning in trading is primarily used for:
(A) Static price setting
(B) Pattern recognition and prediction
(C) Manual intervention
(D) Slowing execution

6. Which of the following is a benefit of algo trading?
(A) Emotional decision-making
(B) Faster execution
(C) Higher transaction costs
(D) Less transparency

7. AI-based trading systems can:
(A) Predict market movements
(B) Eliminate risks completely
(C) Control government policies
(D) Stop market crashes

8. Blockchain technology in trading ensures:
(A) Transparency and security
(B) Slower settlement
(C) Manual data handling
(D) More errors

9. Robo-advisors are used for:
(A) Human-based financial advice
(B) Automated investment advice
(C) Political forecasting
(D) Tax collection

10. Which order type is often used in algo trading?
(A) Market and Limit orders
(B) Handwritten orders
(C) Telephone orders
(D) None of the above

11. Latency in algo trading refers to:
(A) Delay in trade execution
(B) Speed of broadband
(C) Inflation in markets
(D) Currency fluctuation

12. Which technology minimizes latency in trading?
(A) Cloud Computing
(B) Fiber-optic connections
(C) Manual messaging
(D) Satellite phones

13. AI chatbots in trading platforms help with:
(A) Customer queries
(B) Market manipulation
(C) Tax fraud
(D) Printing contracts

14. Big Data analytics in trading helps in:
(A) Ignoring data
(B) Identifying market trends
(C) Random trading
(D) Slower decisions

15. Which of these is a risk of algorithmic trading?
(A) Fat finger error
(B) System failure
(C) Flash crashes
(D) All of the above

16. AI-based fraud detection in markets helps in:
(A) Hiding scams
(B) Identifying unusual patterns
(C) Increasing insider trading
(D) Promoting unfair trade

17. Which global event highlighted the risks of algo trading in 2010?
(A) Dot-com bubble
(B) Flash Crash
(C) COVID-19
(D) 9/11

18. Cloud technology in stock markets is mainly used for:
(A) Data storage and processing
(B) Manual trade settlements
(C) Paper-based transactions
(D) Eliminating brokers

19. Sentiment analysis in AI trading is based on:
(A) Technical charts only
(B) News and social media data
(C) Telephone conversations
(D) Government orders only

20. Which programming language is popular in algo trading?
(A) Python
(B) Latin
(C) French
(D) None of the above

21. AI helps traders by:
(A) Analyzing complex data quickly
(B) Slowing decision-making
(C) Increasing human bias
(D) Reducing data availability

22. Co-location in trading refers to:
(A) Placing servers near exchanges
(B) Manual offices for traders
(C) Branches of stock exchanges
(D) Customer support centers

23. Predictive analytics in trading involves:
(A) Estimating future stock prices
(B) Recording past events only
(C) Ignoring current trends
(D) Random speculation

24. Which financial technology reduces settlement time?
(A) Blockchain
(B) Fax machines
(C) Manual ledgers
(D) Photocopying

25. The main advantage of algo trading over manual trading is:
(A) Speed and accuracy
(B) High emotions
(C) Slower execution
(D) Dependence on rumors

26. Which AI technique helps in identifying stock price patterns?
(A) Neural Networks
(B) Typewriters
(C) Handwritten notes
(D) Radio signals

27. A common disadvantage of HFT is:
(A) Increased volatility
(B) Reduced liquidity
(C) Higher transaction costs
(D) None of the above

28. Dark pools in trading refer to:
(A) Private trading platforms
(B) Public markets
(C) Government auctions
(D) Commodity exchanges

29. AI in portfolio management helps by:
(A) Rebalancing assets automatically
(B) Reducing diversification
(C) Eliminating returns
(D) Promoting manual trading

30. Which technology allows real-time market monitoring?
(A) IoT and AI tools
(B) Typewriters
(C) Post mail
(D) Manual diaries

31. Which is a regulatory concern about algo trading?
(A) Market manipulation
(B) Increased transparency
(C) Slow trading
(D) Decreased liquidity

32. Trading bots operate on:
(A) Predefined rules or AI models
(B) Manual instructions only
(C) Random actions
(D) Human emotions

33. Smart order routing ensures:
(A) Best execution price
(B) Highest losses
(C) Manual errors
(D) Delayed execution

34. Mobile trading apps became popular due to:
(A) Accessibility and ease
(B) Slow performance
(C) Higher costs
(D) Limited availability

35. Which factor gave rise to algo trading globally?
(A) Technological advancements
(B) Lack of computers
(C) Paper-based systems
(D) Telephone trading

36. The term “flash crash” refers to:
(A) Sudden sharp drop in markets
(B) Rise in inflation
(C) Bull market rally
(D) Currency appreciation

37. Which technology can reduce human bias in decision-making?
(A) AI and ML
(B) Manual research
(C) Radio signals
(D) None of the above

38. Big Data sources for trading include:
(A) Social media, news, financial reports
(B) Only handwritten notes
(C) Telephone calls only
(D) Government records alone

39. Which type of algo trading uses pre-set conditions?
(A) Rule-based trading
(B) Manual trading
(C) Random trading
(D) Emotional trading

40. AI helps in risk management by:
(A) Predicting potential risks early
(B) Ignoring risks
(C) Increasing frauds
(D) Reducing transparency

41. Blockchain-based smart contracts in trading ensure:
(A) Automatic settlements
(B) Delays in execution
(C) Manual checking
(D) Fraudulent practices

42. Virtual assistants in trading platforms are designed to:
(A) Guide investors
(B) Manipulate trades
(C) Block investments
(D) Eliminate brokers

43. Risk of overfitting in AI models means:
(A) Model works only on training data
(B) Model adapts well in real life
(C) No errors occur
(D) Always correct predictions

44. Which is the fastest-growing trend in retail trading?
(A) AI-powered trading apps
(B) Telephone orders
(C) Manual stock brokers
(D) Handwritten slips

45. HFT mainly exploits:
(A) Minute price differences
(B) Long-term investments
(C) Corporate earnings
(D) Government taxes

46. Backtesting in algo trading refers to:
(A) Testing strategy on past data
(B) Forward testing only
(C) Ignoring historical data
(D) Manual execution

47. Which sector heavily uses AI for price forecasting?
(A) Stock and commodity markets
(B) Agriculture only
(C) Education
(D) Literature

48. AI models in trading need:
(A) Large amounts of data
(B) No data at all
(C) Random guesses
(D) Manual orders

49. The role of APIs in modern trading is to:
(A) Connect systems for seamless trading
(B) Slow down execution
(C) Remove online trades
(D) Increase manual dependency

50. Which is the ultimate goal of technology in trading?
(A) Faster, accurate, efficient trading
(B) Slow and manual systems
(C) Emotional investment
(D) Higher human intervention