Buy Order Back Out Methods for Cash Sufficiency
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Solution Overview
Problem
Portfolio management systems face challenges in executing buy orders when there is insufficient actual or expected cash, leading to the need for canceling or reducing buy orders, which can result in suboptimal trading proposals.
Innovation Solution
The system implements various back out methods such as Best Fit, Random, Pro-Rate, Order of Descending Quantity, Order of Ascending Quantity, and Factor of Safety to automatically modify buy orders based on available cash, ensuring that buy orders are reduced or canceled in a way that maximizes the chances of a successful trading proposal.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If sell orders are blocked to prevent insufficient cash, then cash sufficiency is improved, but trading execution capability deteriorates
Solution Approach 1:
The system performs preliminary identification of buy orders that should be backed out before cash insufficiency occurs. By proactively analyzing the trade order set and identifying which buy orders to reduce or cancel in advance, the system prevents cash insufficiency while maintaining trading execution capability through automated decision-making.
2Reliability
If buy orders are canceled or reduced to ensure cash sufficiency, then cash sufficiency is improved, but trading proposal quality deteriorates
Solution Approach 1:
The system incorporates feedback mechanisms where the identification of buy orders for backing out is based on analyzing the complete trade order set and cash availability. The system continuously monitors and adjusts the back out decisions to optimize the trading proposal quality while ensuring cash sufficiency, using feedback from cash position and order characteristics.
3Manufacturing precision
If manual adjustment of buy orders is performed, then trading proposal quality can be optimized, but processing time increases
Solution Approach 1:
The system performs self-service by automatically identifying which buy orders should be backed out without requiring manual intervention. The automated identification process analyzes the trade order set, determines cash requirements, and selects appropriate buy orders for reduction or cancellation, thereby optimizing trading proposal quality while minimizing processing time losses.
Data Source
AI summary
A system and method for identifying a candidate set of one or more buy orders associated with an investment account, ordering the buy orders in the candidate set into a chain, determining a back out target value that identifies a fiscal amount by which the candidate set must be reduced, and decrementing an initial asset quantity of one or more successive non-zero quantity buy orders in the chain by a fixed integer quantity to a final asset quantity until the back out target value is achieved. The candidate set of buy orders can then be modified by replacing the respective initial asset quantity with the respective final asset quantity for at least one of the one or more buy orders. The modified candidate set of buy orders can then be provided for trade execution.