Pick and Mix - choosing the best algorithms to fit your FX execution strategy

William Essex sets out to explore in what ways factors that drive a firms execution requirements will influence the most appropriate FX algorithms for them to use and how buy-side clients are increasingly looking to pick and choose algorithms according to what they wish to achieve in any given point in time.

FX isn’t just any old asset class, you know. It’s traded by corporates, commodity firms, governments, tourists, and private individuals out of their back bedrooms. It’s traded on smartphones, tablets, laptops, in trains, at restaurant tables, during lunch hours and in the evenings. You can trade (or at least buy and sell) the major pairs, and an expanding range of exotics, at kiosks in supermarkets. Philip Beasley-Harling, partner and CTO at currency-specialist hedge fund Blacktree Investment Partners, says: “The FX market is a lot of private contracts. Whoever wants to trade can do so.” So what does this tell us? First, that not all FX-market participants are qualified, authorised, compliant, thin-fingered financial professionals. Secondly, that significant FX-trading volumes arise because (for example) corporate treasuries have to manage their cash across borders; governments have to (attempt to) stimulate recoveries; passenger aircraft have to refuel. It’s their market...continued

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