The battle for the best crypto trading platform has been brutal lately. Intense competition has made standing out a necessity in the vibrant crypto market.
As a result of high competition, several innovative features have been onboarded onto several leading crypto exchanges. The intention is to secure a competitive market position. One of these notable features is the Smart Order Routing Terminal. The article shall delve further into that feature offered by Shrimpy, an automated portfolio management platform for crypto investors that offers a multitude of trading tools and investment assistance options.
What is a Smart Order Routing Terminal?
Abbreviated as a SOR terminal, a Smart Order Routing terminal is a type of dedicated automatic order processor. It is utilized by trading bots and algorithms, handling orders by using the best opportunity available throughout a range of trading venues.
SOR terminals follow defined rules, algorithms, and configurations when placing orders. Their emergence was aimed at tackling the daunting liquidity fragmentation issue, a consequence of an increase in multilateral trading facilities (MTFs) as well as trading venues. Such an increase is caused by the trading of the same stock in several differing venues. SOR may, in practice, thrive on liquidity fragmentation.
Shrimpy’s SOR System
Shrimpy has launched its new SOR terminal, fully integrated directly into the platform. The SOR terminal promises to transform all of Shrimpy’s supported exchanges and APIs while working alongside a new developer API system.
How it Works
The SOR starts by evaluating all potential trade opportunities through all available market pairs on its 16 supported exchanges. The terminal uses algorithms to find the best routes of liquidity to execute trades. The routing is based on any changes that arise in the market, with controls placed to account for slippage, spread, conducive trade patterns, trade limits, and time of execution.
Shrimpy’s developer API steps in by enabling developers to add support to the SOR process. The support comes without the complexities that are normally required to run support services for such complicated features. Every executed trade ends up being an accurate limit order aimed at maximizing the routing process’s outcome. Such an outcome may follow a path of numerous trades across several quote currencies before reaching the target asset.
Selling Points for Using the SOR Process
Having a new SOR terminal in conjunction with an attaching developer API system creates several benefits to the Shrimpy trade platform. These benefits include;
Access to various Trade Venues Simultaneously
A Smart Order Routing process utilizes liquidity fragmentation to its advantage by embracing numerous MTFs and trade venues. It gives its users simultaneous access to multiple trade venues as a result. As a result, investors can open positions and execute trades without suffering any losses, which usually occur when trading platforms are unable to find the right amounts of liquidity.
Automatic Best Price Results
One of the SOR terminal’s key selling points is that it runs an automatic search for the best prices. The routing of funds through different venues enables a comparison of all prices on them.
The fact that routing accounts for market changes and follows different paths resulting in the selection of the best trade pairs. Users of exchanges supported by Shrimpy are therefore able to get the best trade values for their digital assets without having to manually log into each exchange account to search for them.
Allows for Additional Trade Control and Validation
SOR means that the Shrimpy trading platform sticks to the best execution requirements. It does so by following optimal trade paths with cost and performance considerations.
This creates some form of control over the order processing and execution path by avoiding poorly priced paths. The process also adds forms of transaction validations during the making of a trade. Users can collect information about the trades executed by getting the trade status.
Provides A Good Framework For Custom Algorithms
The SOR processes are usually utilized by trading bots and algorithms. The result is a highly automated dedicated order processing system.
The high levels of automation, as well as utilization of trading algorithms, give a good launchpad for the usage of customized algorithms. Customization helps in tailoring the trade process and outcomes as per the needs of Shrimpy’s users. Customized Algorithms allow for high specialization within the system as well the services being customer-centric.
Provides Integration Services to Clients
It is possible for any API developer to immediately integrate any SOR endpoints on Shrimpy. The integration process is simplified, creating a single set of integrated APIs that link all the exchanges supported.
The integration enables users to directly connect with shrimp on any of the supported exchanges and easily execute orders, gather data, and manage their accounts. This reduces the potential backlog of millions of orders that may create slowdowns on the exchanges’ servers.
SOR, like any other good innovative trade feature, doesn’t come without a drawback. The first potential challenge is an increase in latency. In a bid to arrive at the best price scenarios, the terminal increases the dormancy of the trade, waiting for the circumstances to be suitable enough. The process of utilizing various revenues simultaneously also contributes to this. It is however important to note that there is a huge net time gain during a trade since a trader doesn’t have to manually search for better prices.
As the competition for market penetration by crypto trading platforms picks up, users are bound to benefit from exceeding competition as it leads to the introduction of improved features and diverse tools. The Smart Order Routing system is one such feature offered by the Shrimpy platform from which crypto users stand to benefit the most.
The benefits include access to a broader array of trade venues by users, best prices for trades, and increased forms of trade path controls that provide more liquidity. However, there’s a potential drawback of increased latency during the trade, thanks to the best price search and multiple venues being sourced. The added benefits do seem like a better trade-off for the potential drawback, billing Shrimpy as an increasingly competitive and robust crypto trading portfolio management tool.