Pioneering Research on Algorithmic Trading by Unison Corporation
Unison Corporation has announced its engagement and commitment in the research and development of Algorithmic Trading to enhance the trading experience for their clients. As one of the fastest-growing foreign currency brokerage groups, Unison is one of the pioneers for Algorithmic Trading.
Algorithmic trading, or commonly known as Algo Trading, is a concept that describes trading carried out through algorithms. It uses a trading system that facilitates transaction decision making in financial markets using advanced mathematical tools.
In this type of technological operation, the need for human operator intervention is minimized, and therefore decision-making is very rapid. This new reality is increasingly present in the financial world and needs to be understood by the organizations in this market.
Having studied the rise of algorithmic trading in different markets, experts in Unison found that electronic interfaces are ubiquitous in the Forex market. Still, those less sophisticated forms have started to stagnate.
Thus, they place their focus on the development of more sophisticated forms of Algorithmic Trading system, with identifications of some empirical signatures of their role in market dynamics. They have subsequently written an automated trading program, which set on refinement in the detail of currency and its execution precision.
It is under the preliminary strategy stimulation test phase, and the market strategists are employing more sophisticated tools to accelerate and eradicate the mismatch of supply and demand.
Machine-learning powered trading algorithms are the most recent culmination of these efforts, as they embody the automation of this search process of trial and error to match supply and demand.
With better predictions, they end up needing fewer trials and fewer errors and close the bid-ask spread. According to Unison’s Head of Research, Lee, today’s artificial intelligence is all about predictions.
“The current wave of advances in artificial intelligence doesn’t bring us intelligence but instead a critical component of intelligence: prediction,” said Lee.
They found that algorithmic trading reduces the number of triangular arbitrage opportunities throughout their development and trials, as algorithmic traders quickly respond to the posted quotes by non-algorithmic traders and profit from any potential arbitrage, which might be an indicator for better predictions.
The team has also modeled an electronic limit order market and found that after the entry of an algorithmic high-frequency trader, the distribution of transaction prices has more mass around the center and thinner far tails.
This model showed that the faster human submits and vary their orders, the more profit the machine makes, as they could better predict the dynamics.
The findings lead to the hypothesis, where algorithmic trading is associated with less uncertain and more predictable bid-ask spreads. All in all, the end of Quarter 3 2015 marks an important stage of Unison’s pioneering research and trials on Algo trading. It is said that their prediction trading bot will be ready soon, and their clients will be able to enjoy it on the Unison Trading Platform.