There are many factors that go into determining how quotes are calculated, including what kind of trading instrument is being quoted.
The most important thing to remember is that KCM Trade is relying on its own sophisticated market, risk, pricing and execution models to create a digital marketplace. As such, how KCM Trade quotes will reflect this bespoke approach to what KCM Trade does.
Quote creation
When KCM Trade quotes an instrument, the following processes all occur:
Quote matching
A matching engine attempts to match buy orders and sell orders when an order is opened, ideally finding matches based on current supply and demand. Orders that aren’t matched are fulfilled by KCM Trade providing its own liquidity to execute the order.
Order and pricing
Market activity is the primary influence on what the best bid or ask price is at any moment. Buyers and sellers are constantly placing orders, pending orders, or limit orders and all of these actions dynamically inform pricing. Since the bid and ask prices are constantly changing, so too does the spread.
Spreads
Though spreads are impacted by many things, volatility and liquidity are key, with spreads becoming a measure of the markets’ uncertainty and risk. The spread is the source of revenue for KCM Trade. Spread is dictated by asynchronous price-data feeds, as well as pricing models that use various mathematical models, trust models, real-time algorithms and adjustments.
Quotes, slippage and requotes
There are articles on slippage and requotes that go into more detail about these topics, but it’s important to mention that both can impact how quotes are calculated. A millisecond of latency can be the difference between an order that is favorable or unfavorable, as it executes in the trading terminal after a delayed request to the trading data center.
Execution
Execution of orders includes calculating quotes based on matching, market activity, spread costs, and slippage/requotes, all of which include processes designed by KCM Trade to benefit its traders. Ultimately it is the unique KCM Trade execution of orders that overall informs how quotes are calculated.
Our algorithms are sophisticated enough to create trust models based on analysis of trading account activity.
We aim to provide the lowest spreads as possible, while executing orders with minimal delays to combat slippage/requotes.
A sustainable business model is integrally and inherently fair; we are never in competition with our traders because our model is sustainable without conflict.
