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The Dark Art of Pre-Trade Analytics

Fri December 22, 2017

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Financial firms commonly review trading activity after the fact to improve their execution strategies. But what they’d really love to do is perform that in real time, pre-trade. Max Bowie looks at how far along market participants are in pursuit of this goal, and the significant challenges to achieving it.

Every trader—or trading algorithm developer—wants to know how what impact their proposed trade will have on the market: will it produce a massive rise or fall in that instrument’s price, or even move the market as a whole? Will it produce a flurry of activity from competitors in reaction? Or will it skim unnoticed below the radar, allowing them to place more of the same kind of trade?