Algorithmic Trading: Strategies and Execution

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Questions and Answers

Which of the following muscles is located in the superficial posterior compartment of the forearm?

  • Pronator Quadratus
  • Flexor Digitorum Profundus
  • Flexor Carpi Ulnaris
  • Brachioradialis (correct)

What action is primarily facilitated by the pronator quadratus?

  • Pronation of the forearm (correct)
  • Flexion of the wrist
  • Extension of the fingers
  • Supination of the forearm

Which muscle helps bring the thumb in?

  • Palmaris Longus
  • Extensor Pollicis Brevis
  • Flexor Pollicis Longus (correct)
  • Flexor Digitorum Profundus

Which of the following muscles is part of the deep posterior forearm muscles and acts on the thumb?

<p>Abductor Pollicis Longus (A)</p> Signup and view all the answers

Which muscle is categorized as an intermediate anterior forearm muscle?

<p>Flexor Digitorum Superficialis (D)</p> Signup and view all the answers

Which of the following muscles is NOT typically associated with wrist movement rather with movements of digits?

<p>Extensor Digitorum (D)</p> Signup and view all the answers

Which of the following muscles is considered a 'punching muscle' due to its action in the forearm?

<p>Pronator Quadratus (A)</p> Signup and view all the answers

What is the primary function of the extensor pollicis longus?

<p>Extension of the thumb (C)</p> Signup and view all the answers

Which muscle in the posterior forearm is also associated with elbow movements?

<p>Brachioradialis (A)</p> Signup and view all the answers

Which of the following lists includes only superficial anterior forearm muscles?

<p>Flexor Carpi Radialis, Flexor Carpi Ulnaris, Pronator Teres (A)</p> Signup and view all the answers

Which of the following muscles is responsible for initiating the start of a fist?

<p>Flexor Digitorum Profundus (C)</p> Signup and view all the answers

What action does the 'beer lifting, break dancing' muscles group in the posterior forearm primarily enable?

<p>Wrist Extension (A)</p> Signup and view all the answers

Which muscle is located in the anterior compartment of the forearm and runs along the same line as the palmaris longus?

<p>Flexor Digitorum Superficialis (C)</p> Signup and view all the answers

Which statement accurately describes the function of the extensor carpi ulnaris?

<p>It extends and adducts the wrist. (B)</p> Signup and view all the answers

What is the mnemonic for remembering the deep posterior forearm muscles?

<p>Syrup And Peanuts Preferably Included (C)</p> Signup and view all the answers

According to the mnemonic 'PASS, FAIL, PASS, FAIL', which of the following muscles corresponds to the second 'FAIL'?

<p>Flexor Carpi Ulnaris (A)</p> Signup and view all the answers

The Extensor Indicis is responsible for what action?

<p>Extending the index finger (B)</p> Signup and view all the answers

For which action do the Extensor Carpi Radialis Longus and Brevis muscles work together?

<p>Wrist Extension (D)</p> Signup and view all the answers

Which of the forearm muscles listed below is primarily responsible for flexing the wrist?

<p>Flexor Carpi Radialis (A)</p> Signup and view all the answers

Which of the following muscles is responsible for extending the little finger?

<p>Extensor Digiti Minimi (A)</p> Signup and view all the answers

Flashcards

Pronator Quadratus

Rotates the forearm at the wrist, enabling the palm to turn downward or backward.

Flexor Digitorum Superficialis

Flexes the fingers at the proximal interphalangeal joints; runs in the same line as palmaris longus.

Flexor Pollicis Longus

Flexes the thumb.

Flexor Digitorum Profundus

Flexes the fingers; starts at the fist

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Superficial Posterior Forearm Muscles

Superficial posterior forearm muscles involved in lifting, dancing, and resisting atrophy.

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Abductor Pollicis Longus

Extends and abducts the thumb.

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Extensor Pollicis Brevis

Extends the thumb.

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Extensor Pollicis Longus

Extends the thumb at the IP joint.

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Extensor Indicis

Extends the index finger.

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PASS, FAIL, PASS, FAIL

The superficial anterior forearm muscles - Pronator Teres, Flexor Carpi Radialis, Palmaris Longus, Flexor Carpi Ulnaris

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Study Notes

Algorithmic Trading Overview

  • Algorithmic trading is trading based on a defined set of rules that can be implemented on a computer.
  • This strategy is used for execution, trend following, arbitrage, and market making.

Execution

  • The challenge in execution is to fulfill a large order without causing market fluctuations.
  • It involves dividing a large order into smaller ones and executing these gradually.
  • TWAP (Time Weighted Average Price) is an example of an execution strategy.

TWAP (Time Weighted Average Price) Formula

  • The formula for TWAP is: $$ V_{TWAP} = \frac{\sum_{i=1}^{n}V_i}{n} $$
  • $V_i$ represents the volume traded in period i.
  • n stands for the number of periods.

Trend Following

  • Trend following is designed to identify and capitalize on market trends.
  • Technical indicators are used to spot trends, and trades are made in the trend's direction.
  • A moving average crossover is an example of a trend-following strategy.

Moving Average Crossover

  • It functions by calculating short-term and long-term moving averages of the price.
  • A buy signal is generated when the short-term average crosses above the long-term average.
  • A sell signal occurs when the short-term average crosses below the long-term average.

Arbitrage

  • Arbitrage aims to profit from price discrepancies in different markets.
  • It involves buying an asset in a market where it is cheaper and selling it where it is more expensive.
  • Triangular arbitrage is provided as an example.

Triangular Arbitrage

  • It involves identifying three assets where the cross-rate between two differs from the price of the third.
  • An example scenario involves currency conversions: $1 to £0.8, £1 to Â¥130, and $1 to Â¥120.
  • Example trade (this example is not profitable):
    • Sell $10,000 to buy £8,000
    • Sell £8,000 to buy Â¥1,040,000
    • Sell Â¥1,040,000 to buy $8,666.67
  • Profit (in example): -$10,000 + $8,666.67 = -$1,333.33

Market Making

  • Market making seeks to profit from the spread between bid and ask prices.
  • This involves simultaneously posting bid and ask orders for an asset.
  • A simple market-making strategy is outlined.

Simple Market Making

  • It requires posting bid and ask orders at a set distance from the current price.
  • Profit is generated by collecting the spread between the bid and ask prices.

Algorithmic Trading Risks

  • Trading algorithms are exposed to model risk, execution risk, and data risk.
  • Algorithmic trading also carries a risk of overfitting and regulatory risk.

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