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Commentary

Adam Sussman
Traders Magazine Online News

Technology Needs A Catalyst. How Does Survival Sound?

In an exclusive to Traders Magazine, Liquidnet's Adam Sussman discusses why we should love AI and stop fearing it. Also, he delves into how the majority are focusing the conversation on the wrong issues when it comes to AI and automation, and are minimizing the fear of job losses by downplaying the promise of massive efficiencies.

Traders Poll

To what extent (percentage) are you employing artificial intelligence on your trading desk?





Are All Block Trades The Same?

Trading in big blocks of stock at prices arranged between parties is an increasingly common strategy today. But what happens when an algo makes an error, chasing after block volume that isn't really there? For more information, visit www.bloombergtradebook.com.

Q&A

Q: Why would an algorithm chase after block trades in the first place?

A: If a trader has a volume participation benchmark (for example 10%), they want to participate with 10% of the market's volume. An algorithm typically only has access to the electronic markets but looks at all trading activity to know what trades are happening and how much volume it needs to trade in order to be 10% of the overall volume. If an algorithm thinks that it missed out on a large trade it will start to trade more heavily to make up for that missing volume, this type of "catch up" can cause unintended market impact.

Q: How can a trader tell the algorithm the correct block trades to ignore?

A: Traders need algorithms that have access to the correct methodology for block identification in each market. This way they donít need to adjust anything on their algorithm. Tradebook shows traders the average block size in each market using the STAZ function on the Bloomberg Professional(R) service.

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About Insight Bites in 60 Seconds

When it comes to stock trading, so much is changing so quickly that it’s difficult to understand and manage all the variables. Whether it’s algorithmic trading, price swings or dark liquidity, The Insight Bites series presents smart and concise snapshots of what a trader can do to address and overcome the most pressing of these challenges. Hosted by Traders Magazine and brought to you by Bloomberg Tradebook, each 60 second animated video provides quick and humorous insight into a unique issue that traders face every day. For more information, visit www.bloombergtradebook.com.