The Trade Execution Horizon specifies the designated time frame within which a particular trading order or strategy is intended to be fully completed. This period can range from instantaneous to several hours or days, depending on the asset, volume, and market conditions.
Mechanism
The chosen execution horizon dictates the approach to order slicing, the algorithmic participation rate in the market, and the overall interaction strategy with liquidity. A shorter horizon prioritizes speed, while a longer one prioritphasizes minimal market impact and price optimization.
Methodology
Strategically, determining an optimal execution horizon involves balancing the desire for price certainty against the need to mitigate market impact, especially for large institutional orders in crypto. Traders adjust this parameter based on prevailing liquidity, asset volatility, and their specific risk tolerance, aiming to achieve the best possible average execution price for a given volume.
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