This gitbook will give very technical details of modern trading industry.

For fundamental knowledge, please visit "Fundamental".

First, let's introduce some concepts: What is trading?

In Buy-side (Market Maker, Prop, AM, Fund)...

Quantitative Trading

Quantitative trading techniques include high-frequency trading, algorithmic trading and statistical arbitrage. These techniques are rapid-fire and typically have short-term investment horizons.

In Sell Side (Broker)...

(ET Desk) Electronic Trading = Algorithmic Trading = Algorithm Execution

  1. Electronic trading: is in contrast to older floor trading and phone trading. 只要满足：无纸化、无人化就是电子化交易。
  2. Algorithmic trading: is a method of executing a large order (too large to fill all at once) using automated pre-programmed trading instructions accounting for variables such as time, price, and volume[1] to send small slices of the order (child orders) out to the market over time. Algorithmic trading is not an attempt to make a trading profit.

(PT Desk) Portfolio Trading = Program Trading = Basket Trading

  1. basket of stocks
  2. must be executed by a computer program simultaneously based on predetermined conditions.
  3. Alan Ersoy: UBS APAC Head of Program Trading
  4. Those who call program trading as 程式化交易 are naive in this industry.

(Prop Desk), Non-Commission-targeted

  1. Risk Trading, Central Risk Book Desk
  2. Electronic Market Making, Quantitative Market Making, Electronic Volatility Trading
  3. Index Arbitrage, Inventory Management within Delta One Desk

Cannot Define

Automated Trading

A computer program will automatically generates orders based on predefined set of rules using a trading strategy and automatically submits them to a market center or exchange.

"Automated Trading can be very dangerous." - B Banks

"Our hedge fund specializes in fully automated trading. We have developed a best-in-class automated trading platform, featuring direct market access to major financial exchanges, and a complete system for developing and automating trading strategies. We will provide the technology, the capital, detailed historical data, lowest cost commissions, and highest quality executions—you will leverage these tools to build profitable trading strategies. We’ve built the body, you build the brains." - ACR

Systematic Trading

Systematic trading is just a methodical way of defining trade goals, risk controls and rules that can make investment and trading decisions. It can be both manually, partially or fully using of system.

It is just about your approach that is the oposite of being chaotic, emotional ect.

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