Exit Algorithm

Discussion in 'Order Execution' started by jbusse, Feb 7, 2017.

  1. jbusse

    jbusse

    They are all common stocks, U.S. equities, positively correlated. Relatively liquid. This is an everyday occurrence, so not able to comment on type of market (i.e., it varies). Not mirror hedges or inverses. Obviously I don't know where the market is headed before I make the trades.
     
    #11     Feb 7, 2017
  2. Zzzz1

    Zzzz1

    Thanks.

    Have you already compared current performance vs a vwap implied performance?

     
    #12     Feb 7, 2017
  3. jbusse

    jbusse

    I would be happy to get VWAP. It's a new strategy -- I haven't spent much time optimizing this piece of it. But this is now a priority, and I was wondering if there were any simple rules to follow. Thanks.
     
    #13     Feb 7, 2017
  4. Zzzz1

    Zzzz1

    Before you set rules or design a different approach I believe you should understand whether what you are currently doing is sub-optimal, on target, or above average. That is why I suggested vwap as benchmark. It is very easy to implement this metric if you are using a systematized trading platform that allows for programming or scripting components. Simply start tracking vwap from the time you submit your orders (by tracking how much volume crosses at which prices) until you get your fills and exist each individual position. You can then normalize the metrics of each symbol across your whole basket and compare the vwap price with your normalized fill price and as result you will see how you are currently performing vs a market vwap. Only when you believe that you underperform should you start thinking about optimizing your current approach. Always (a) measure, (b) analyze, (c) optimize. What I described in a nutshell is the starting point to what is in professional space called TCA, transaction cost analysis.

     
    #14     Feb 7, 2017
    tommcginnis likes this.