Test Order Flag for Risk-Free Trading Strategy Simulation
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Solution Overview
Problem
Current securities trading systems lack the ability to test trading strategies without actual market transactions, making it difficult for traders to evaluate and refine their strategies effectively.
Innovation Solution
The development of a system that allows for the placement and processing of test orders within a trading and processing computer system, which mimics real orders but does not generate actual transactions, enabling traders to simulate trading scenarios without risking actual securities.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If test orders are processed through the entire trading system including execution and settlement, then the testing of trading strategies becomes more realistic and comprehensive, but actual securities transactions occur which contradicts the purpose of risk-free testing
Solution Approach 1:
The patent introduces a test order flag as an intermediary mechanism that allows test orders to traverse the entire trading system infrastructure (order book, matching engine, settlement system) while being identified and handled differently from real orders. The flag acts as a mediator that enables comprehensive system testing without triggering actual securities transactions, allowing traders to evaluate strategy performance against real market conditions without real financial risk.
2Object-affected harmful factors
If test orders are completely isolated from real orders, then actual transactions are prevented, but the ability to test strategies against real market conditions is reduced
Solution Approach 1:
The patent applies local quality by allowing test orders to interact with real orders in specific aspects (matching, execution pricing, order book dynamics) while maintaining a distinguishing characteristic (the test order flag) that prevents actual securities transfer. This enables test orders to experience realistic market conditions including competition with real orders, price movements, and liquidity variations, while the localized difference in flag status ensures no actual transactions occur.
3Measurement precision
If the system processes test orders identically to real orders, then testing accuracy improves, but system complexity increases due to the need for order differentiation and special processing rules
Solution Approach 1:
The system implements self-service by automatically detecting and handling test orders based on their flag status without requiring complex external intervention. The trading system's existing order processing infrastructure automatically adapts to test orders by checking the flag and applying appropriate processing rules (matching against real orders, preventing actual settlement), thereby maintaining testing accuracy while avoiding the need for entirely separate complex testing systems.
Data Source
AI summary
In various embodiments, real and test trading orders are processed and results are transmitted back to the entities originating the orders.