Auto trading


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Introduction to auto trading. The process of using automated systems to have your Managed Account traded.

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Auto trading

  1. 1. Man vs. Machine What is Auto-Trading?
  2. 2. Attention Manipulation
  3. 3. “Goldman had engineered every major market manipulation since the Great Depression - and they’re about to do it again” Rolling Stone, May 2009
  4. 4. 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.”
  5. 5. “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.”
  6. 6. 26% EXECUTED BY NYSE 10 PUBLIC EXCHANGES FACTS 200+ internalising brokerdealers 30 Dark Pools Exchange that doesn't have to report WHO is trading and HOW MUCH they are trading
  7. 7. Is this BAD News for us?
  8. 8. 95% 5% < Traders will lose their account within 1 year Of People will be profitable by themselves
  9. 9. The Likely Conclusion for the Majority YOU are the problem ★ YOU are holding you back ★ YOU always will be ★ The industry is against you Remove YOU as the problem YOU shouldn't be doing the trading ★
  10. 10. How it Works Investors 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.
  11. 11. TERMS Algorithmic Program Black Box Robot HFT Quantitative
  12. 12. 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
  13. 13. Four Categories of Algorithmic Trading 1 Auto-Hedging A formula automatically generates hedging orders for managing risk levels dynamically. 3 Liquidity Access Liquidity Access Trading solutions are designed to improve access to multiple trading venues. 2 Statistical Trading Statistical Trading Orders are generated according to algorithms designed around macro portfolio models or differentials to relative values. 4 Algorithmic Algorithmic Execution Execution Trading styles are automated to keep execution controlled and running smoothly.
  14. 14. Prevalence % % % 56% % 17% 1% Others Institutional Retail 15% 11% High - Frequency Trading Hedge Found
  15. 15. TESTING Optimisation ‣ Robustness ‣
  16. 16. Systems Infrastructure Data Markets
  17. 17.