Viewpoint - Algorithmic execution strategies - e-FOREX Magazine

First Published: e-Forex Magazine 30 / Algorithmic FX Trading / January, 2008

Jonathan Wykes Cameron Mouat Algorithmic execution has become widely used in the equities and futures markets by a variety of traders who are looking to optimise their trading performance. As FX traders continue to seek best execution it is increasingly being seen as a tool to achieve this. The term algorithmic execution has often been confused with algorithmic trading, another common term in FX markets. Algorithmic trading is the process where an algorithm determines whether a position needs to be increased or decreased based off a set of rules and market conditions. Algorithmic execution takes place after the decision to trade has been made with the goal of determining the best way to execute and provide optimum performance against various benchmarks. The FX market has traditionally been dealer driven and access to liquidity has been via relationships, with the client paying margin in order to trade. The opaque nature in the market’s structure and the related difficulty in...continued

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