Trading systems for hedge funds: Boosting execution speed and risk control

Author: Marcus Ingram

As hedge funds begin to scale, it’s logical to look for ways to streamline operations. Generally, the key areas to be examined are:

• Execution speeds
• Risk management
• Ways to gain an edge on the competition

Here are some options for funds looking for ways to optimise their setup.

Trading directly using FIX API within the liquidity bridge

Trading in financial markets requires fast decision making and even faster order execution, especially for those engaging in high-frequency trading. The FIX API cuts out the intermediary trading platform, giving optimal speeds, minimal slippage, and even more trading opportunities.

If we pair this with bridging technology, funds can combine faster execution with managing multiple liquidity sources simultaneously. Not only does this make managing Liquidity Provider relationships easier, but it also offers better pricing on trades. This is done using the aggregation available in the Trade Processor liquidity bridging system, which selects the best price for each order while hedging against risk across multiple liquidity venues.

Access to several liquidity providers through a single bridge is vital for optimising trade flow by increasing the depth of the order book and having a diverse pool of liquidity. This is a great way to increase profitability at each market-depth layer or position size.

MetaTrader 5 for hedge funds

For those who still prefer the familiarity of MetaTrader (MT), it's worth discussing the MetaTrader 5 Hedge Fund license. This is a more cost-effective and tailored MT offer specifically for the needs of hedge funds. It includes trading, reporting, and analysis functionality without all of the unnecessary extras.

This offer from MetaQuotes also provides the access level to install your own software tools, such as a liquidity bridge or PAMM. Trade Processor is a risk management suite that monitors, analyses, and mitigates risk in real time.

This setup allows you to access institutional-grade pricing through direct liquidity relationships while saving on traded volume commissions.

Bookkeeping with PAMM for hedge funds

Hedge funds continuously seek ways to diversify their services to attract more capital by providing flexibility to investors.

PAMM allows you to create different pooled accounts tailored to each strategy, and all allocating, fees, commissions, and reporting are done automatically. This helps to scale the service more effectively.

For those looking to explore retail investors as a new frontier for their funds, PAMM lets you set up different minimum investments for each strategy, with complete flexibility on the information shown, reporting provided, and actions investors can take. The deposits and withdrawals can be handled through easy integration, so your main focus can be on investment decisions.

Final thoughts on trading systems for hedge funds

A liquidity bridging system like Trade Processor provides hedge funds with crucial advantages that improve trading performance, reduce long-term costs and strengthen risk management at the same time. For those looking to stay in the market or move ahead, improving your tech stack is a strategic investment that sets the foundation for future growth built on efficient and stable trading operations.

If you’re looking for ways to improve your execution, bookkeeping, or trading environment, the team at sales@t4b.com would be happy to answer any questions.