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  Understanding CAT
Principles on which Computer-assisted Trading is based
Principles
Short-term price movements are entirely random
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multipleCHOICE
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Who will use CAT
General
Brokerage firms/ Service providers
Account Executives/ Portfolio Managers
Retail Investors/
Active Traders
Asset and Fund Managers
Computer simulation
Psychological factor
FAQ

   
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3. multipleCHOICE order
A multipleCHOICE order is the essence of Computer-assisted Trading.

It is as simple as the previously-explained newTRADE but simultaneously allows investrors to develop strategies to suit their personal requirements.

The difference is that a multipleCHOICE allows the user to trade between 5 different securities instead of 2.
Example:

Sell A and buy either B, C, D or E at 3% savings

Entering a mutipleCHOICE order creates a self-contained "trading pool". This allows the user to continuously switch between securities in the pool depending on whether they out- or under-perform one another.
This can be done automatically or manually (see Reverse Order below).

Advanced options allow th user to get much more out of Computer-assisted Trading:

1. Reverse order entry:

In the above example, A might have outperformed D by 3% and the order executed.
By using the Revers order feature a new order is automatically entered at the same conditions:

Sell A and buy either B, C, D or E at 3% savings

This without any intervention, each time taking advantage of the random short-term movements of the securities involved.

2. Trailing stop:

The trailing stop is a fantastic feature that automatically delays the moment of execution if the Actual Savings continues to rise after trading conditions are met.

Suppose you want to sell 100 IBM and buy 400 Cisco at 3%. You enter a trail of 10%.

Let us then assume that conditions are met and the 3% Requested Savings are reached. With a Trailing Stop CAT will not execute the order, but instead will continue to follow the order and execute only when and if the Actual Savings drops below 2.7% (which is 3% Requested Savings minus 10% of the Requested Savings).

Execution only takes place when Actual Savings drop below the Trailing Stop. Example.

This feture is made for CAT and we strongly adivse investors to take advantage of its features every time an order is entered.


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