TCA10 November 2023by Wakett

The Real Cost of Trading Slippage & How Automated Software Can Help You Reduce It

The cost of trading slippage is based on a number of factors, including market volatility, market liquidity, and how quickly you can secure a favourable bid/ask price. To come up with a definite answer on how all these things affect your bottom line, what you need to run is a Transaction Cost Analysis (TCA) that explains what happened during your trades and why. 


How A Transaction Cost Analysis Helps Determine Your Cost of Trading Slippage

A TCA is basically a process that determines whether your trade executions were right and their related cost to your portfolio. In other words, it helps you determine whether the trades were arranged at a favourable price to you.

That may sound simple enough but when you’re dealing with hundreds of trades for each of the portfolios you manage, doing a TCA manually is practically impossible

To add insult to injury, many off-the-shelf trading software “solutions” either do not give you the opportunity to run such analyses or else run very generic analyses that do not go into detail needed.

This forces many trading companies – particularly SMEs – to spend a lot of money on running TCAs or to forfeit them entirely, which means they are never fully aware of how much trading costs and slippage are adding up to.


The Wakett Framework Has Built-In TCA Capabilities

If you’re a company that simply cannot afford the exorbitant prices often asked for TCAs, then you’ll be happy to know that there are tools out there that can help you run an in-depth TCA on a limited budget.

The Wakett Framework has been built using Event Stream Processing, ensuring that every feature it has can be customised to your specific needs at a fraction of the price of other tailor-made software. 

This includes solutions for investment managers and prop traders, like running analyses on the cost of trading slippage, whose results are issued to you as an in depth report with time stamps, market liquidity, market volatility, and much more. This, in turn, can be used directly with our other solutions to get the software to automatically inform you and make different decisions to better trade your portfolio in the future.

So, if you would like to know the true cost of your trading and slippage, as well as to start reducing it, get in touch with us for a consultation. It comes with no obligations!