Nicholas Pratt
Nicholas Pratt

Customising FX algorithms: fine tuning your order execution strategies

The FX world has now fully adapted and attuned itself to the world of algorithmic trading and these tools are now being widely employed across the industry as opposed to being restricted to the elite word of high frequency trading populated by technology-driven hedge funds and prop shops. But now that mainstream adoption has begun, it is clear that the demands from traders are becoming more specific when it comes to their algorithms and the services needed to support them.

The one-size-fits-all approach has become largely redundant and traders are now looking to fine-tune their execution set-up to fit certain trading strategies, functions, time frames, visibility preferences and investment objectives. The benefits of moving away from a ‘black box’ approach are becoming more obvious. But what steps should traders take when looking to develop more customisation? Is it possible to customise an off-the-self trading system? Can the customisation be done in tandem with the vendors or can it be done in-house?And while the benefits of customisation may be attractive to firms looking to form a competitive edge and mark themselves as distinct from their rivals, are there any risks associated with this tailoring? Will it become harder to backtest and benchmark such unique and untried trading techniques? Perhaps lessons can be learned from other asset classes that are further along the evolutionary scale in terms of algorithms. Or perhaps it is too precarious a step to blindly...continued

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