Over the last few years, algorithmic trading has staked its place as a key tool on the desk, evolving from a specialist trading mechanism to default execution architecture.
According to The TRADE’s 2025 Algorithmic Trading Survey: Hedge Funds, aggressive adoption of algos has been the go-to method for most respondents, with approximately 63% stating that they depend on algorithmic usage to trade more than half of their value.
This figure marks a clear growth from the previous year, which recorded 59% of respondents stating they traded much of their value via algorithms – a 4% rise from 2024.
A similar uptick was also noted in the percentage of respondents trading more than 80% of value, which has grown by 4% from 28.67% in 2024 to 32.67% in 2025.
These findings further cement algorithmic trading’s intrinsic positioning within hedge fund trading activity, indicating that almost a third of respondents make use of algos to trade a large part of their value, revealing the effectiveness of these mechanisms for hedge fund trading operations.
This has also been further validated by notable decreases across the data, with the respondents that trade 10% to 20% of value dropping by 4 percentage points, a likely indicator of growth elsewhere.
Speaking at TradeTechFX US in February 2026, Eric Brown, FX trader at T. Rowe Price, explained that his own firm “currently executes around 10-20% of its volume via algo in any given month,” adding that it’s a number he could see increasing “as we become a little bit more sophisticated about when we use it and what data we can employ to aid in that”.
Brown added: “We may send through a handful of trades a week in the algo space and that just doesn’t get you accurate sample size to be able to draw significant conclusions […] I think data is kind of the holy grail for the future – allowing traders to have consistent data in front of them to be able to know this is the best time to use an algo based on the current conditions.”
Read more – Beyond the data: A new era of buy-side expectations in algorithmic trading
This boom in algorithmic usage and dependency has also been recognised in other areas.
In a 2022 BIS Triennial Survey, JP Morgan and Bloomberg estimates suggested that algorithmic trading accounted for approximately 60-73% of US equity trading volume, 40-50% in European equities, and more than 70% in futures markets.
Choosing the right algo
Referring to the specific algorithm types mostly used by hedge fund managers, ‘VWAP’ came out on top as the most popular choice, with 74% of respondents leveraging this strategy.
This was also followed by ‘dark liquidity seeking’ (68% of responses) and ‘% volume’ (66.67% of responses), with the latter seeing the biggest year-on-year increase, up by 4.67% from 2024.
To explain this increase, the survey points towards recent bouts of market volatility experienced over the last few years, pushing traders to find ways to reduce market footprint while navigating these markets.
Elsewhere, the growth of automation and multi-asset execution capabilities on desks appears to have boosted trends such as ‘implementation shortfall (basket)’, which has more than doubled over the last five years, up from 10.91% in 2021 to 24.67% in 2025.
Similarly, ‘other’ types of algorithms have also experienced growth, potentially pointing towards more custom or niche strategies being used on some hedge fund desks to execute trades.
With The TRADE’s 2026 iteration of the survey on the horizon, the landscape will certainly be one to watch, to see if algorithms continue to be crucial asset for hedge funds, and the extent of their importance on desks.