Impact Minimization

The Impact Minimization strategy is designed for traders who prioritize reducing market impact while maintaining execution efficiency. It follows a VWAP (Volume Weighted Average Price) trajectory, ensuring trades are distributed over time to minimize price disruption.

How It Works

Users specify a duration, defining the execution time frame.
The engine prioritizes maker execution to optimize cost efficiency but will use taker execution when necessary to stay within the set duration.
Orders are executed incrementally along a VWAP trajectory, ensuring small portions of the trade are spread out over time.
Market impact relative to arrival price is minimized through passive execution.
Execution dynamically adjusts based on real-time market conditions.

When to Use This Strategy

Fixed Duration Execution – Suitable for traders who need execution over a specific time frame.
High Sensitivity to Market Impact – Helps reduce market disruption when executing large orders.
Manageable Taker Fees – Works best when taker fees are reasonable, ensuring cost-effective execution.
Market-Aware Execution – The engine continuously adapts to market conditions to optimize order placement.

Potential Drawbacks

Higher Variance in Execution Outcomes – Market conditions can impact final trade results.
Fixed Duration Constraints – If liquidity shifts unexpectedly, taker execution may increase to meet the deadline.
Limited Flexibility for Short Durations – Shorter execution windows may reduce the ability to optimize order placement.

This strategy is ideal for large trades requiring minimal market impact while leveraging market-aware execution for cost efficiency.