Optimal Approach to Algorithmic Trading
Optimal Approach to Algorithmic TradingThe best execution through use of algorithmic tools depends to a large extent on the presence of various critical ingredients, such as:
- Clear understanding of portfolio management strategies and objectives
- Robust pre-trade models
- Balancing timing and impact cost issues
- Effective intelligent integration of OMS and direct market access trading platforms
- Close, iterative relationships with algorithmic trading providers
- Thorough post-trade analysis and feedback
- Providing high speed transmission of market data and transaction messages to other applications and users
- Offering a vendor independent platform that is able to accept and distribute data from any market data vendor
- Having pre-integrated security and monitoring for both compliance and cost effective operations
Streamlined:Ensuring optimized acquisition, processing, and delivery of market data through an efficient and integrated platform
Reliable:Enabling continuous delivery of market data with the robustness to support the needs of the front-office
Algo Open Architecture:Promoting interoperability by using open published specifications for Application Program Interface (APIs), protocols, and data and file formats. Open architectures enable companies to build loosely coupled, flexible, and reconfigurable solutions
Algorithms are widely recognized as one of the fastest moving bandwagons in the capital markets. Employing rules based strategies has enabled buy-side firms to increase productivity, lower commission costs and reduce implementation shortfall.
Algorithmic trading cuts down transaction costs and allows investment managers to take control of their own trading processes. By breaking large orders into smaller chunks, buy-side institutions are able to disguise their orders and participate in a stock’s trading volume across an entire day or for a few hours. More sophisticated algorithms allow buy-side firms to fine-tune the trading parameters in terms of start time, end time, and aggressiveness. In today’s hyper-competitive, cost-conscious trading environment, being the first to innovate can give a broker a significant advantage over the competition both in capturing the order flow of early adopters and building a reputation as a thought leader.