Daniel Joshua925 Morris

Xem bản dịch

What is Transaction Cost Analysis (TCA) and why does it matter in forex?

TCA measures the hidden costs between your “paper” price and real execution: spread, slippage, market impact, and fees. Metrics include implementation shortfall (entry vs. decision price), fill ratio, and adverse selection (price moving against you after fill). In FX, add venue quality and LP responsiveness. Process: tag every order with timestamp, venue, quote snapshot, and mark-to-market 1/5/15 minutes post-fill. Aggregate by pair, session, and strategy. Use the findings: reduce trading during illiquid hours, switch to limit orders when appropriate, tighten/release slippage tolerances, or pick better LPs/brokers. Pros: direct profit uplift without changing signals; improved broker negotiation leverage. Cons: data plumbing overhead and analysis complexity. If you can’t measure costs, you can’t control them—TCA turns execution from an afterthought into a managed P&L lever.