Pipeline Trading Systems LLC, a leading electronic brokerage firm for institutions, announced today the release of a streaming, at-trade analytic tool to help traders maximize alpha capture and minimize adverse selection.
Alpha Pro now brings the power of predictive analytics directly to the trader's desktop, providing actionable intelligence immediately on order arrival. Incoming orders are analyzed in light of current market conditions and historical patterns, and factors most likely to predict impact-free price movement are identified. Taking these statistical factors into account, the service then recommends a trading strategy predicted to maximize alpha capture and minimize adverse selection. As the trade proceeds, the analytics stream provides updates to users on changes in the alpha outlook, leveraging market feedback from the execution process and feeds including news and real-time order flow analysis. Using the unique Alpha Pro interface, traders take unprecedented control throughout trade execution, modulating the recommended strategy with their knowledge of factors driving optimal execution strategy.
"We've been delighted by the results our clients are achieving with Alpha Pro," said Henri Waelbroeck, Pipeline's Director of Research. "Our Alpha Pro clients have reduced implementation shortfall losses by typically 20-30%, and in some cases up to 65%. This shows it's possible to reverse adverse selection by taking a well-grounded view on short-term alpha, then using predictive algorithm control to execute this view efficiently."(1)
In today's HFT-dominated markets, execution control is often illusory because profit-maximizing HFT technologies tend to deliver liquidity at inopportune times and prices. Pipeline's Alpha Pro gives institutional traders direct access to powerful predictive analytics that can help counter these tactics, and retake control. Traders incorporate the insights from Alpha Pro to make better strategic choices for reduced adverse selection and greater alpha capture.
(1) These performance results measure the reduction of implementation shortfall relative to shortfalls for a comparable set of orders from the same client prior to adopting the Alpha Pro execution methodology, after controlling for trade difficulty. Any reference to Pipeline performance contained herein is based on internal testing and/or historic performance levels, which Pipeline seeks to maintain or exceed but nevertheless does not guarantee.