Nicholas Pratt
Nicholas Pratt

Electronic FX – catering for the needs of Quantitatively driven FX trading firms

The outlook for most financial markets in 2009 is almost universally bleak but inevitably there are certain trading strategies that seemed destined to succeed in this climate. One of the most obvious beneficiaries of the high market volatility will be those traders engaged in quantitative-driven strategies. Fuelled by high frequency, low latency algorithms, it is these traders that will be best able to react to unpredictable and high velocity market movements.

First Published: e-Forex Magazine 34 / Features / January, 2009

And of all the asset classes that feature such trading, it is the FX market that is likely to be the most attractive, not least because of the advancements that have been made in terms of technology and infrastructure. “The FX market now has more of the functionality and characteristics that are needed for quantitative trading,” says Tanya Beder, chairman of SBCC group, a US-based advisory firm that specialises in quantitative trading strategies. “We have seen a convergence in terms of more electronic tools and more reliable data sets. There was a time, says 10 to 20 years ago, when FX data was problematic and unreliable meaning that trades were unable to be done in anywhere near the timeframe needed for quantitative trading. But now that lag between market data and market reality has been eliminated by and large and FX data reflects what is actually going in the market,” says Beder. There has also been a better management of the operational risk associated with the FX market, says...continued

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