Algorithmic trading and Direct Market Access (DMA) are important tools helping both buy and sell-side traders to achieve best execution. However there is still some confusion with other different types of trading, in particular "black box", quantitative and high frequency trading.The algorithmic trading services which brokers provide are computerised systems responsible for executing specific orders to buy or sell a given asset. In the US in 2005 over 15,000 new cases were diagnosed, in the same year there were over 10,000 deaths due to myeloma.It is the second most common blood cancer but funding for research and support is still a lot lower than other better known cancers. Throughout the book examples from empirical studies bridge the gap between the theory and practice of trading. So in some ways the term algorithmic trading is an unfortunate choice, perhaps a more appropriate term is "algorithmic execution".Direct Market Access (DMA) enables buy-side traders to issue electronic orders almost directly to the exchanges, by using a proxy for their broker's membership.

Effectively DMA gives the buy-side much the same level of control over an order's execution as a sell-side trader has.Systematic, black-box, high-frequency and automated trading are all terms which all sound like references to algorithmic trading. Market, limit, stop, hidden, iceberg, peg, routed and immediate-or-cancel orders are all described with illustrated examples.
These systems are responsible for actually instigating orders, although they may well actually use DMA or algorithmic trading systems to execute them. The following figure tries to illustrate this:So together with manual trading, DMA and algorithmic trading form the three core execution methods for handling orders. They are also sometimes referred to as: "High touch" = Manual trading "Low touch" = Algorithmic trading "Zero touch" = DMABlack-box or quantitative trading follow systematic rules to initiate and close out positions, the investments may be for days or even months.

TWAP, VWAP, Percent of Volume, Minimal Impact, Implementation Shortfall, Adaptive Shortfall, Market On Close and Pairs trading algorithms are all covered, together with common variations.
High frequency trading is similar, but the timescales are shrunk, it aims to take advantage of intraday opportunities, so anything from hours down to fractions of a second.
An in-depth example shows how these may be broken down into constituents such as market impact, timing risk, spread and opportunity cost and other fees.

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