Automated Trading Server Order Prioritization Latency
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
In electronic trading, network latency between client terminals and exchanges leads to delayed order execution, especially for traders located far from exchanges, resulting in a disadvantage in fast-moving markets, and existing automated trading systems lack the ability to perform multiple actions simultaneously based on trading strategies.
Innovation Solution
Implementing a server-based automated trading system that uses order priority levels to determine the sequence of sending orders to an exchange, allowing for simultaneous execution of multiple orders based on predefined rules, thereby reducing latency and improving trading efficiency.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of time
If automated trading decisions are made on individual client terminals, then trading autonomy is maintained, but network latency causes delayed order execution for distant traders
Solution Approach 1:
The system segments trading functions into two parts: strategy formulation remains on client terminals (maintaining autonomy), while order execution is centralized on the server (reducing latency). This segmentation allows each component to operate in its optimal environment.
Solution Approach 2:
The server acts as an intermediary between client terminals and the exchange. It receives trading strategies from clients, generates orders locally, and submits them to the exchange, thereby eliminating the need for distant client terminals to communicate directly with the exchange for each order.
2Productivity
If multiple orders are sent simultaneously from a shared server, then trading speed improves, but determining which order to send first becomes complex
Solution Approach 1:
The system changes the parameter of order submission from simultaneous to sequential based on priority levels. Each order is assigned a priority parameter that determines its submission sequence, transforming the complex simultaneous multi-order problem into a manageable sequential process.
Solution Approach 2:
The system performs preliminary action by pre-assigning priority levels to orders before they are submitted to the exchange. This advance classification eliminates the need for complex real-time decision-making during order submission.
3Ease of operation
If traders use manual order entry with spreadsheet programs, then flexibility is maintained, but trading speed decreases
Solution Approach 1:
The system merges the flexibility of spreadsheet-based strategy formulation with the speed of automated server-based order execution. Traders can define complex trading strategies in spreadsheets while the server handles rapid order generation and submission.
Solution Approach 2:
The system replaces manual mechanical order entry with automated electronic order generation and submission. The server automatically converts spreadsheet data into exchange orders and transmits them electronically, eliminating manual typing and clicking.
Data Source
AI summary
A system and method are provided for prioritized automated trading. One example method may include receiving a plurality of parameters, where each parameter has an order-related action associated with a trading strategy, and then detecting one or more events that trigger a plurality of order related actions. The method then includes determining priority levels in relation to a plurality of triggered order-related actions using at least one priority rule, and processing the plurality of triggered order-related action in an order associated with the determined priority levels.