AppLabs’ Insurance TCoE

In today’s cut throat competitive world, exchange venues battle to have faster execution times for the high frequency trading desks in order to take advantage of ever changing trading opportunities. Hedge funds and investment banks contest to increase speed to market, and offer potential platforms to their customers and for internal use. Order latency is now measured in microseconds with clock resolution in nanoseconds.

Algorithms are used to detect trading opportunities within the market and by 2008 it is expected that 40% of the trading volume in the US equities markets will be contributed by algorithmic trading. As such, the algorithms must be entirely reliable in order that all opportunities are maximized. This white paper looks at the challenges faced when testing algorithms and looks at how to test the various types of algorithm.