ninja, they are all derived from the CFAI texts, except # 5 (I drew this to AFers), the one being discussed now.
with:4) small % of AVD // narrow spread // not urgent = VWAP
now with 5** ) small % of AVD // wide spread // not urgent** = ???
I would probably go for broker too giving the spread…
Folks, want to revive this thread and make a final chart in my notes. Here’s what I see based solely on this thread. Can anyone fill in the question marks?
Spread / Urgency / % ADV => Strategy
Wide / High / Large => Broker
Wide / Low / Small => Broker / Crossing
Wide / High / Small => ?
Wide / Low / Large => ?
Narrow / High / Large => Crossing
Narrow / Low / Small => VWAP
Narrow / High / Small => Implementation Shortfall
Narrow / Low / Large => ?
Is the above summary accurate? Sorry to bring this old thread but I get answers wrong in this area. Thanks.
Spread / Urgency / % ADV => Strategy
——————————————————
Wide / High / Large => If urgency is high it should be traded in Crossing network where institutional investors provide liquidity. Since its a large, orders not likely to be filled here should be refered to broker
but crossing networks does not provide any gurantee of order execution. Should the urgent order be still places in crossing network?
am I missing something here?
Spread is wide = Crossing will help lower commission
Urgency is high = Broker can help find counterparty or may himself position a trade. Order is urgent so delay at broker end may increase delay costs. If broker start shopping the order it may affect revising the quotes upwards. Risk with crossing is no guarantee of execution. So i suggested orders not likely to be traded in POSIT should be given to broker. If only one choice is to be chosen then I guess it should be broker only.
May be wrong
edit: I think some more information should be required in above. Wide/Large % ADV / Urgent
yes, I agree
when I see URGENT i automatically think BROKER or IMPLEM SF
and if you see on top of urgent, large % of daily + wide spread, then go with broker
Any ranges[above %x] to determine if it’s large %ADV or wide %spread?
I went a 30% of daily volume on CFAI exams…so that’s my treshold
Regarding %spread, not so sure, sorry