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Forex aggregation stills a young technology. Application of the complex event processing and event stream processing, advanced technology is obvious. However, there are a number of problems and issues that must be addressed in the implementation point of view mainly because of the nature of the Forex market. The next section discusses some of the shortcomings and challenges of using Forex aggregator.
Some of them, in particular, because of the nature of the currency market, such as “multiple hits” and “liquidity mirage”, are leading to customers who have reduced the ratio of success in their trade.
Combining different systems and technologies
To present information in aggregate form, aggregators have to deal with a variety of ways in which data is provided by various sources of liquidity. Several sources provide data in a standard format FIX and other industry to provide it in binary format. Although some sources provide two levels of orders, which displays live orders that a trader can trade against the rest work on the system request. Aggregation of data from sources RFQ liquidity that continuous flow of information is relatively easier. However, RFQ sources, not the flow of data in real time, aggregators face the challenge of updating information in real time, on request quotes to place every few minutes. Providing connectivity to all venues is why the most important task for the aggregators. Experts believe that the key to achieving this connection is the establishment and maintenance of relationships with the venues, rather than any technical or technological wizardry.
Implementation and latency issues
Several buy-side trading firms are reviewing their approach to the use of the aggregation service after reaching no benefits that they expected. This may be especially associated with the attitude of many members, who expect one-sided access to all available sources of liquidity, rather than taking a more selective view of aggregation, and sources and included in their trading strategy. Lack of clear strategic orientation affects the efficiency of aggregation. In addition, problems in implementation and method of delivery, aggregators also face another major problem of delay, which was made with the data. In other words, while the technology is very good, its use should be reconsidered. Experts believe that net service aggregation one incomplete and algorithmic solution traders can embed the aggregation of services in their strategies to save valuable time performance and cost.
Liquidity Mirage
Although the aggregation of liquidity is especially useful for the ransom of the side of traders, this also can become counterproductive. Banks, which are occupied into Forex usually demonstrate the same price on several portals and sites of electronic commercial, creating the thus specific level of duplicating. The liquidity is reflected aggregator therefore cannot be the truth of liquidity.
Before you decide to make a forex investment or start forex trading yourself, better find a good forex book and learn more about the currency exchange market – this will save you from lots of troubles and traps