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Market impact – the effect your trading has on the wider market, post trade
One of the key metrics you need to consider in your choice of liquidity and transaction cost analysis, is market impact. Or put simply, the effect your trading has on the wider market post trade. Rather simplistically you are told that, if the market moves a lot in reaction to your trading, then that’s a bad thing and you pay wider spreads with a high cost of rejection and higher response times.
Video commentary by David Mercer, LMAX Exchange CEO
But, if you trade on ‘last look’ prices, lower market impact would mean you benefit from tighter spreads and lower cost of rejections and hold times. Let’s take a deeper look at this. The easy one first.
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Market impact – the effect your trading has on the wider market, post trade
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Daily FX Market Commentary
Good morning, LMAX Close USDJPY 111.076 | EURUSD 1.05904 | AUDUSD 0.75016 | NZDUSD 0.69356 | USDCAD 1.34076 | USDCHF 1.00926 | GBPUSD 1.2373 |  LMAX Ranges 6am London time Highs   Lows EURUSD              1.05870 | 1.05704 USDJPY                111.586 | 111.123 GBPUSD              1.23869 | 1.23658 AUDUSD             0.75087 | 0.74783 USDCHF              1.01049 | 1.00898 USDCAD              […]
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NFP Miss No Bother to US Dollar
The US Dollar enjoyed a nice run of gains on Friday, despite a huge NFP miss. It seems a rise in geopolitical risk and ongoing hawkish Fed speak have been inspiring a fresh round of US Dollar bids, easily offsetting any negative flow from the US jobs r…