Quantitative trading includes quantitative analysis of markets and transactions automatically executed through programming. Quantitative trading is at the service of clients who have diversified needs in strategic profitability, transaction cost optimization, and transaction size.

The provision of automated and quantitative trading can diversify platform operations and expose clients to a better experience.

It is useful to list auxiliary trading functions in some common trading platforms and provide clients with more trading tools, which will enable them to participate in more transactions and improve trading platform operations.

Order splitting

Order splittings are more often employed by high-end clients who have bulk orders but intend to minimize their impact on the market.

Iceberg orders are the most typical form of order splitting in which a large order is split into multiple small orders with each one being set at a fixed price, so as to avoid opposite movement caused by the large order.

The active order splitting’s algorithm splits the order averagely on the basis of time and trading volume. When time is averaged, orders are placed at regular intervals, and when trading volume is averaged, daily average trading volume distribution is taken into account and orders are placed correspondingly.

Order splitting can spread trading volumes along the timeline, thus lowering the impact cost and concealing trading intentions and lessening market attention.

Contract for Difference (CFD)

CFD assists arbitrage traders in trading two contracts simultaneously. Arbitrage orders in trading platforms (Dalian Commodity Exchange, Zhengzhou Commodity Exchange) can lock the counterpart’s position in matching process, which is more reliable than third-party arbitrage tools.

In the meantime, CFD provides liquidity to trading platform, and pending orders engaged in arbitrage contracts can be converted into those of another contract through CFD, thereby complementing each other in liquidity.

Fixed amount investment

It is an auxiliary investment function commonly employed by fund corporations. As with split order, there are fixed amount investments based on time and price fluctuations.

The time interval cycle for fixed amount investment lasts longer than that of order splitting. The former is aimed to lower the requirement for proper timing.

Because timing is the most challenging and costliest decision with only slim chances of success in trading, some clients might desire to invest but are unable, or unwilling, to time the market. Fixed amount investment based on price fluctuations serves these clients by spreading investment time using small amounts.

Fixed amount investment in general, and those based on price fluctuations in particular, can be used for profit taking trading.

Trailing stop loss

Trailing stops loss are more common in trend trading. Stop loss orders follow the price change in a preset manner. More profits can be retained compared to fixed price stop loss.

Strategic trading

Professional trading platforms usually open strategic trading functions so that advanced traders can increase their profits by programming their own strategies.

Strategic trading functions usually make use of data such as price, trading volume, and market depth provided by the trading platform; the calculation and assessment of which generates a trading signal for the user.

Strategic trading reduces the cost of manual trading and facilitates the testing and execution of multiple trading programs. However, it is very demanding for clients.

Market making and trend trading belong to strategic trading

Management and risk control of automated trading and quantitative trading.

Automated and quantitative trading are convenient and present several options to traders. They also increase management requirements to trading platforms.

Changes in the liquidity of trading platforms become more complex. On the one hand, it can lead to a rise in overall liquidity and active trading. On the other hand, investment tools may give rise to a lack of liquidity at specific moments.

Exchanges need to evaluate the consequences of different types of trading. It would be a better option to introduce different types of users, encourage them to carry out different types of trading, and provide new tools to ensure smooth liquidity. In this way, a balance is struck between long and short trading, liquidity supply, and demand.

Generally speaking, the provision of automated and quantitative trading functions featuring lower barriers, more options, client friendliness, and topicality is a desirable technology choice for trading platforms.

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