Day trading programme
Program trading is a type of trading in securitiesusually consisting of baskets of fifteen stocks or more that are executed by a computer program simultaneously based on predetermined conditions. Several factors help to explain the explosion in program trading. Technological advances spawned the growth of electronic communication networks.
These electronic exchanges, like Instinet day trading programme Archipelago Exchangeallow thousands of buy and sell orders to be matched very rapidly, without human intervention. In addition, the proliferation of hedge funds with all their sophisticated trading strategies have helped drive program-trading volume.
As technology advanced and access to electronic day trading programme became easier and faster, program trading developed into the much broader algorithmic trading and high-frequency trading strategies employed by the investment banks and hedge funds.
Program Trading is a strategy normally used by large institutional traders. Barrons shows a detailed breakdown of the NYSE-published program trading figures each week, giving the figures for the largest program trading firms such day trading programme investment banks.
Index Arbitrage is a particular type of Program Trading which attempts to profit from price discrepancies between the basket of stocks which make up a stock index and its derivatives such as the future based on that index. The "premium" Day trading programme or "spread" is the difference between the stock index future fair value and the day trading programme index level.
As the derivative is based on the index, the two should day trading programme have a very close relationship. If there is a sufficiently large difference the arbitraging program will attempt to buy the relatively cheap level whether that is the basket of stocks which make up the index or the index future and sell the relatively expensive day trading programme, making money from the price discrepancy.
The fair value calculation takes into account the time to expiration of the future contract, day trading programme dividends received from holding all the stocks, and the interest cost of buying the stocks. From Wikipedia, the free encyclopedia.
Concise Encyclopedia of Economics 1st ed. Library of Economics and Liberty. Activist shareholder Distressed securities Risk arbitrage Special situation. Algorithmic trading Day trading High-frequency trading Prime brokerage Program trading Proprietary trading. Arbitrage pricing theory Assets under management Black—Scholes model Greeks finance: Vulture funds Family offices Financial endowments Fund of hedge funds High-net-worth individual Institutional investors Insurance companies Investment banks Merchant banks Pension funds Day trading programme wealth funds.
Fund governance Hedge Fund Standards Board. Alternative investment management companies Hedge funds Hedge fund managers. Retrieved from " https: Views Read Edit View history.
Day trading software is computer software intended to facilitate day trading of stocks or other financial instruments. Day trading software falls into three main categories: Data, Chartingand Trade Execution. In the case of stocks and futures, those prices come from the exchange where they are traded. Forex is a little different as there is no central exchange. The vast majority of day trading programme traders will chart prices in some kind of charting software. Many charting vendors also supply data feeds.
Charting packages all tend to offer the same basic technical analysis indicators. Advanced packages often include a complete programming language for creating more indicators, or testing different trading strategies. Once traders have their data and can see and analyze it on a chart, they will at some point want to place day trading programme trade.
To do so, they need to day trading programme some kind of trade execution software or electronic trading platform. Most stock brokerage firms will provide proprietary software linked directly to their in-house systems, but many third party applications are available through Independent software vendors ISV. The advantage of day trading programme party programs is that they allow the trader to trade through different brokers whilst retaining the same interface.
Day trading programme may also offer a number of advanced features such as automatic trade execution. From Wikipedia, the free encyclopedia. The Globe and Mail. Retrieved 19 October Retrieved 29 October Retrieved from " https: Views Read Edit View history.
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