djamal-soft
الأحد، 7 يونيو 2015
Are you interested in a financial trading system for yourself or your investment business? There are many starting points. There are several important considerations to ensure it gets done right and you arrive at a strong system.
The first challenge is laying out what you want to achieve on the trading side versus position-keeping, accounting and trade processing. There are a plethora of software platforms available from those less than $200 to massive systems used by global financial institutions. At the beginning you should ask "what do we really need versus want in terms of trader tools?" The answer will help guide the decision-making process as you look at each component of the trader's tool chest.
Individuals, family offices and small trading firms have a wide variety of strategies to consider. These users don't necessarily require a financial trading system with every whiz-bang feature ever invented. In fact, fewer features, but ones that are specific to your trading strategies, typically outperform large, complex systems. This is not just because of the cost -- fewer features reduces "tinkering" and allows the trader to focus on his or her strategy rather than electronic distractions that undermine discipline. That being said, the ability to implement sophisticated if-then rules and contingent orders is critical to keep up with market variations. The ability to create and manage multiple strategies easily is a mandatory feature. Configurable components provide flexibility. Smaller firms and individual traders also appreciate highly transparent rules and rule builder features.
The main components or modules in a financial trading system to consider are: trading strategy and analysis, trade execution, market data management, position management, profit and loss analysis, and risk management. Depending on the complexity of your needs, two additional modules to consider would be for accounting and user security access. These latter two are needed for formal corporate environments. Otherwise you can rely on broker statements and PC login security.
From a trading strategy and analysis standpoint, Microsoft Excel tends to be one of the top 2 or 3 applications. You can easily program trading strategies directly in Excel with formulas, VBA, and manual user controls such as dropdowns, data entry cells, and macro buttons. A trader can quickly pull in market data (prices, volume, PE ratios, etc.) and combine it with technical and fundamental indicators with simple if-then statements and Excel's native calculation engine. Elaborate pre- and post-trade analysis can be done along with charting and trend analysis in Excel. That's why it's so widely used by Wall Street and City of London traders who have the best desktop trading systems in the world at their disposal.
Trade execution in a financial trading system is best left to dedicated broker systems, either retail or prime broker. In the case of a corporate treasury, this may be a sell-side investment bank's online system, or even direct order entry into electronic markets, ECNs, dark pools and other liquidity centers. Typically, this is accomplished by dedicated order management systems (OMS) with accessible APIs and a wide range of order types. There is really no point trying to use anything else.
Building a financial trading system in Excel involves strategy definition, data management, position sizing, P&L reporting, backtesting and a variety of other processes. You can build or integrate third-party components for these functions. Excel can also be used for basic back office trade processing, though there are dedicated systems available which are better at this. Real time market executions require special infrastructure to handle large volumes and low-latency speed -- Excel is less suited to this than software coded in C# or java.
If you're planning to implement a financial trading system, Excel is likely to become a major part of your trading operation. Hopefully, these insights will help make the right decisions for your trading success.
The first challenge is laying out what you want to achieve on the trading side versus position-keeping, accounting and trade processing. There are a plethora of software platforms available from those less than $200 to massive systems used by global financial institutions. At the beginning you should ask "what do we really need versus want in terms of trader tools?" The answer will help guide the decision-making process as you look at each component of the trader's tool chest.
Individuals, family offices and small trading firms have a wide variety of strategies to consider. These users don't necessarily require a financial trading system with every whiz-bang feature ever invented. In fact, fewer features, but ones that are specific to your trading strategies, typically outperform large, complex systems. This is not just because of the cost -- fewer features reduces "tinkering" and allows the trader to focus on his or her strategy rather than electronic distractions that undermine discipline. That being said, the ability to implement sophisticated if-then rules and contingent orders is critical to keep up with market variations. The ability to create and manage multiple strategies easily is a mandatory feature. Configurable components provide flexibility. Smaller firms and individual traders also appreciate highly transparent rules and rule builder features.
The main components or modules in a financial trading system to consider are: trading strategy and analysis, trade execution, market data management, position management, profit and loss analysis, and risk management. Depending on the complexity of your needs, two additional modules to consider would be for accounting and user security access. These latter two are needed for formal corporate environments. Otherwise you can rely on broker statements and PC login security.
From a trading strategy and analysis standpoint, Microsoft Excel tends to be one of the top 2 or 3 applications. You can easily program trading strategies directly in Excel with formulas, VBA, and manual user controls such as dropdowns, data entry cells, and macro buttons. A trader can quickly pull in market data (prices, volume, PE ratios, etc.) and combine it with technical and fundamental indicators with simple if-then statements and Excel's native calculation engine. Elaborate pre- and post-trade analysis can be done along with charting and trend analysis in Excel. That's why it's so widely used by Wall Street and City of London traders who have the best desktop trading systems in the world at their disposal.
Trade execution in a financial trading system is best left to dedicated broker systems, either retail or prime broker. In the case of a corporate treasury, this may be a sell-side investment bank's online system, or even direct order entry into electronic markets, ECNs, dark pools and other liquidity centers. Typically, this is accomplished by dedicated order management systems (OMS) with accessible APIs and a wide range of order types. There is really no point trying to use anything else.
Building a financial trading system in Excel involves strategy definition, data management, position sizing, P&L reporting, backtesting and a variety of other processes. You can build or integrate third-party components for these functions. Excel can also be used for basic back office trade processing, though there are dedicated systems available which are better at this. Real time market executions require special infrastructure to handle large volumes and low-latency speed -- Excel is less suited to this than software coded in C# or java.
If you're planning to implement a financial trading system, Excel is likely to become a major part of your trading operation. Hopefully, these insights will help make the right decisions for your trading success.
About the Author:
A top quality financial trading system uses special tool kits and components designed for the purpose. Learn more about these components and how to implement them in Excel at ExcelTradingModels.
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