Gain competitive advantage by using FX trading algorithms
The fragmentation of the foreign exchange (FX) market, along with credit challenges has prompted traders to leverage technology for efficient access to multiple liquidity pools. Algorithms that operate within predefined parameters can enhance trading profitability by increasing efficiency, improving execution speed, and providing better access to liquidity. Additionally, they offer greater scalability and flexibility, while minimising market impact.
The right FX trading platform can transform institutional trading by providing real-time market data, advanced order types and supporting execution algorithms. Recognised for frequently delivering better trading outcomes (for illiquid or larger trades) than simple risk transfer or Request for Quote (RFQ), algorithmic FX trading can support multiple execution strategies by slicing larger orders into smaller clips and smart-routing them across diversified liquidity pools to minimise market impact and information leakage.
FX algorithms can be categorised as Passive (generally slower, lower footprint, but greater duration risk), or Aggressive (faster, higher footprint, but shorter time in market). Others are defined by specific order types, like achieving a Time Weighted Average Price (TWAP) or Volume Weighted Average Price (VWAP), or a Pegged order which allow limit orders to be adjusted based on market conditions.
FX traders have the option to either develop their own proprietary algorithms or choose from a wide variety of algorithms offered by banks. Their selection may depend on factors such as market conditions, their risk appetite, the time of day, or compliance requirements. This allows traders to identify the most suitable algorithms for their portfolio or specific trades.
Liquidity pool optimisation is also a significant aspect of algo execution, as it involves matching various algorithms to liquidity pools where the likelihood of successfully filling orders is highest.
Today, FX algorithms present a valuable opportunity to enhance traders’ execution outcomes, providing them with a competitive edge in the market.
Real-time market data and insight with LSEG Workspace for FX trading
Monitor real-time, volume-tiered, high-frequency FX market reference rates. Click directly into key currency impacting news and charts. Market data includes turn-impact adjusted FX forwards and high-frequency spot rates.
Explore specialised FX content such as industry polls, broker research, global economic indicator forecasts and probability-implied central bank rates for future meeting dates. You can also connect with our team of expert analysts who provide a neutral short-term view and operate around the clock.
Utilise Curve Builder analytics or your own in-house data for curve construction and market making purposes.
Gain insight into intraday trading volume and liquidity trends with the FX Heatmap, as well as Tradefeedr’s Pre-trade TCA analytics to minimise market impact.
Use Case
What is FX algorithmic trading?
Algorithmic FX trading leverages computer models to execute trades based on predefined parameters and instructions, considering multiple variables such as risk profile, trading strategy, time of day, currency pair, market liquidity, size of trade, price, and all-in cost.
Trading firms use algorithms to optimise trading performance and increase the speed of trades. They can efficiently access multiple pools of liquidity and split trades into smaller amounts.
Our solutions
Optimise trading outcomes using algorithms on LSEG FX platforms
LSEG FX platforms support buy-side clients using FX trading algorithms to place orders and trade. Sell-side firms also use algorithms, as well as developing their own FX algorithms for client use.
Access market-leading liquidity over LSEG FX platforms. FX trading algorithms can trade spot, forwards, swaps and NDFs with Liquidity Provider relationships on FXall, or place orders in spot and forwards on the FX Matching Central Limit Order Book platform.
Advanced Trade Execution offers seamless access to liquidity, all from our complete workflow solution, Workspace for FX Trading. Clients can connect to FXall, FX Matching and third-party venues such as CBOE FX, EuronextFX and B3. Advanced Trade Execution enables trading algorithms to access multiple liquidity pools, while fully automating cross-venue FX trading workflows from a client’s desktop and supporting front- and back-office processing (STP).
Clients can also leverage advanced pre and post-trade analytics through LSEG’s partnership with Tradefeedr. Used for pre-trade analytics, Tradefeedr’s Algo Forecasting model identifies the most appropriate algorithm based on factors like the currency pair, size of the trade, time of day, liquidity conditions and risk policy. Based on Tradefeedr’s data lake of observed trades and trade cost estimates, Algo Forecasting can identify bank algorithms which match these parameters, highlighting the optimal execution algorithm, and forecasting its performance.
Features & Benefits
Enhanced trading using FX algorithms
Use algorithms to access more liquidity pools.
Scalability to manage large numbers of small trades.
Use a range of FX algorithms for different strategies or currencies.
Find out more
Related solutions
Request details
Submit your details and one of our experts will be in touch to start the conversation.
Email your local sales team
Call your local sales team
Americas
All countries (toll free): +1 800 427 7570
Brazil: +55 11 47009629
Argentina: +54 11 53546700
Chile: +56 2 24838932
Mexico: +52 55 80005740
Colombia: +57 1 4419404
Europe, Middle East, Africa
Europe: +442045302020
Africa: +27 11 775 3188
Middle East & North Africa: 800035704182
Asia Pacific (Sub-Regional)
Australia & Pacific Islands: +612 8066 2494
China mainland: +86 10 6627 1095
Hong Kong & Macau: +852 3077 5499
India, Bangladesh, Nepal, Maldives & Sri Lanka:
+91 22 6180 7525
Indonesia: +622150960350
Japan: +813 6743 6515
Korea: +822 3478 4303
Malaysia & Brunei: +603 7 724 0502
New Zealand: +64 9913 6203
Philippines: 180 089 094 050 (Globe) or
180 014 410 639 (PLDT)
Singapore and all non-listed ASEAN Countries:
+65 6415 5484
Taiwan: +886 2 7734 4677
Thailand & Laos: +662 844 9576