auto trading
DESCRIPTION
Introduction to auto trading. The process of using automated systems to have your Managed Account traded.TRANSCRIPT
Man vs. Machine What is Auto-Trading?
AttentionManipulation
“Goldman had engineered every major market
manipulation since the Great Depression - and they’re about
to do it again” Rolling Stone, May 2009
May 2009 a former computer programmer at their Wall Street headquarters had been charged with using sensitive computer codes to steal trade secrets. The codes are core to Goldmans' algorithmic trading systems.
The bank's lawyer made the statement that this “raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”
“A computer-implemented system and method for executing trades of financial securities according to a combination passive/aggressive trading strategy that reliably executes trades of lists of securities or blocks of a single security within a desired time frame while taking advantage of dynamic market movement to realize price improvement for the trade within the desired time frame. A passive trading agent executes trades at advantageous prices by floating portions of the order at the bid or ask to maximize exposure to the inside market and attract market orders. An aggressive agent opportunistically takes liquidity as it arises, setting discretionary prices in accordance with historical trading data of the specified security.”
FACTS 26% EXECUTED
BY NYSE
Exchange that doesn't have to report WHO is trading and HOW MUCH they are trading
10 PUBLIC EXCHANGES
30 Dark Pools
200+ internalising broker-dealers
Is this BAD News for us?
Traders will lose their account within 1 year
Of People will be profitable by
themselves
95% 5%<
The Likely Conclusion for the Majority
YOU are the problem★ YOU are holding you back
Remove YOU as the problem
★ YOU always will be★ The industry is against you
★ YOU shouldn't be doing the trading
How it WorksInvestors connect their computers to trading systems known as electronic communication networks (ECN).
!
‣ Electronic Broking Systems
‣ Multi-bank Trading system
‣ Single bank Trading systems
Once connected, a computer algorithm monitors price quotes from different ECNs and places orders - all without immediate manual interaction.
TERMS Algorithmic
Black Box
Program
Robot
QuantitativeHFT
WHAT AN ALGORITHM DOES
TELLS the trader EXACLY when to enter a position
TELLS the TRADER how much to buy or sell
TELLS the TRADER whether to sell short or buy long
TELLS the TRADER when to exit the position
?
Auto-HedgingA formula automatically
generates hedging orders for managing risk levels
dynamically.
Statistical TradingOrders are generated according to algorithms designed around
macro portfolio models or differentials to relative values.
Liquidity Access
Trading solutions are designed to improve access to multiple trading venues.
Algorithmic Execution
Trading styles are automated to keep execution controlled and
running smoothly.
1 2
3 4
Auto-HedgingA formula automatically
generates hedging orders for managing risk levels
dynamically.
Statistical TradingOrders are generated according to algorithms designed around
macro portfolio models or differentials to relative values.
Liquidity Access
Trading solutions are designed to improve access to multiple trading venues.
Algorithmic Execution
Trading styles are automated to keep execution controlled and
running smoothly.
Four Categories of Algorithmic Trading
Others High - Frequency TradingInstitutional Hedge FoundRetail
Prevalence
1%
56%
17%15%
11%
%
%
%
%
‣ Optimisation‣ Robustness
TESTING
SystemsInfrastructureDataMarkets