Hello I was reading about this in investitopia:
https://www.investopedia.com/articl...algorithmic-trading-concepts-and-examples.asp
I don't understand a thing, maybe because I am not native ebglish, would you please explain to me what does this mean?
I have 2 questions:
Question 1)
''Volume Weighted Average Price (VWAP)
Volume weighted average price strategy breaks up a large order and releases dynamically determined smaller chunks of the order to the market using stock-specific historical volume profiles. The aim is to execute the order close to the Volume Weighted Average Price (VWAP).''
What does it mean ''breaks uo a large order using stock specific hystorical volume profiles''?
What is this indicator ? (Historical volume profiles)? I have never heard about it. What does it shows to us? Does it compute an average of all the volume traded in N days?
And why does it execute the order CLOSE TO the VWAP? Wouldn't it be better to execute it ABOVE, OR BELOW the VWAP?
Question number 2
Time weighted average price strategy breaks up a large order and releases dynamically determined smaller chunks of the order to the market using evenly divided time slots between a start and end time. The aim is to execute the order close to the average price between the start and end times, thereby minimizing market impact.
What does it means with ''releases dynamically determined smaller chunks of the order to the market using evenly divided time slots between a start and end time'' ?
Basically: I have a large sell order, I want to execute it above or close to the VWAP, then I split the order time to time until is it filled at my condition? Does this mean with that prhase?
https://www.investopedia.com/articl...algorithmic-trading-concepts-and-examples.asp
I don't understand a thing, maybe because I am not native ebglish, would you please explain to me what does this mean?
I have 2 questions:
Question 1)
''Volume Weighted Average Price (VWAP)
Volume weighted average price strategy breaks up a large order and releases dynamically determined smaller chunks of the order to the market using stock-specific historical volume profiles. The aim is to execute the order close to the Volume Weighted Average Price (VWAP).''
What does it mean ''breaks uo a large order using stock specific hystorical volume profiles''?
What is this indicator ? (Historical volume profiles)? I have never heard about it. What does it shows to us? Does it compute an average of all the volume traded in N days?
And why does it execute the order CLOSE TO the VWAP? Wouldn't it be better to execute it ABOVE, OR BELOW the VWAP?
Question number 2
Time weighted average price strategy breaks up a large order and releases dynamically determined smaller chunks of the order to the market using evenly divided time slots between a start and end time. The aim is to execute the order close to the average price between the start and end times, thereby minimizing market impact.
What does it means with ''releases dynamically determined smaller chunks of the order to the market using evenly divided time slots between a start and end time'' ?
Basically: I have a large sell order, I want to execute it above or close to the VWAP, then I split the order time to time until is it filled at my condition? Does this mean with that prhase?