Tom Arran Tom Arran, Saturday 8th June 2019, 12:17 PM GMT+0000
Trading Performance product intervention measures

Do Ticks Improve Algorithmic Trading Performance

High Volume Tick Data allows for heightened market information on quantitative trading models, which are used by high-frequency investors and significant hedge funds. These ticks help to increase profitability alongside trading strategies. They will also benefit traders when it comes to FX Liquidity. It’s arguable that in today’s market, it’s required for high-frequency investors to use ticks as it’ll restore their market efficiency dramatically.

Quantitative Trading Models

For institutional fund managers to achieve low latency, they must invest heavily in network collocations and hardware. This will increase liquidity with financial data centres while at the same time, give investor’s better tick density data. The Quantitative Trading Models work best with regular market information that is associated with ticks. This will provide high-frequency investors with a better advantage against slow traders. Ultimately, this creates increased gains and allows for trades to be filled promptly. This applies particularly with take-profit orders and stop-loss orders.

Tick Data will Restore Market Efficiency

A recent study evaluated the FX Market’s frequency size and one-way arbitrage opportunities. The research paper from Akram indicated that by using the best spot exchange rates with major currency pairs like the USD/EUR, they could increase exchange rate swaps. This doesn’t increase profits but does help efficiency. Traders that exploit arbitrage opportunities will have their market liquidity decrease.

The MT4 Tick

The higher the number of ticks that traders or investors can obtain, the higher the chance that investors will have low split spreads or zero split spreads. Both of which are considered to be a healthy level of liquidity. However, there is now scientific or systematise data backing any form of a high-density tick. Most of the time, traders have to guess if the spread will end up being good or bad.

Tom Arran

Author: Tom Arran

Tom has over 10 years experience on crypto currencies, first mining bitcoin on an old university computer for 20 cents a coin to now day trading bitcoin in between helping to start whichbroker.com. Tom has previously held roles at a leading EU brokerage and provided insight and consultancy work for number of UK banks in Crypto. Tom Arran can be contacted at [email protected],

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