Given a situation, how do we decide the appropriate trading method such as implementation short fall, VWAP, TWAP, dealer or broker? There is an example in the CFA book (book 6, page 45, exhibit 12). I coudn’t get it? Appreciate your help.
Depends on Volume and what kind of trade you are doing (market, limit) and what is purpose of the trade (liqudity, information ect)
This is what LIII all about. You need to be able to suggest a method based on given factors. Implemetation is less subject to gaming by trader, however, it requires more trading data. VWAP is easier to understand and calcuate, however, it can be gamed more easily. Which is more important to the siutation?