Multiple securities firms are actively promoting the "splitting algorithm" APP, which will appear in the APP with threefold value. How will it affect daily trading?

The strategy quickly makes buy and sell decisions based on real-time market data, and can execute a large number of trading orders quickly and accurately through the use of a splitting algorithm tool.In general, the split order algorithm is suitable for wealthy, experienced, and strategic individual investors. Its essence is to optimize trading efficiency through technical means. However, it is not suitable for small retail investors. Small trades have little impact on the market, and using tools may actually increase transaction fees. "Newcomers" who are not familiar with technical tools should also use them cautiously. The tool itself has a clear practicality, with advantages and risks coexisting. A wealth management official from a securities firm told reporters, "It is undeniable that algorithm tools have advantages in trading, but tools have a dual nature, and their risks cannot be ignored." Firstly, algorithms may fail in extreme market conditions. For example, if an investor wants to buy stocks in batches and splits the order into half, the market suddenly crashes (or surges), causing losses on the part bought at a high price or lowering the cost on the part bought at a low price, but the overall outcome may not meet expectations. Secondly, the liquidity trap may cause the split order to "get stuck." For thinly traded small-cap stocks, there may be no buyers for the small orders split. Moreover, algorithms themselves have flaws. Some algorithms are designed based on historical data, such as the "even split order method." However, if the market is exceptionally volatile today or trading rules have changed, the algorithm may still place orders in the old way and end up causing more harm than good. A more subtle risk lies in parameter settings. Quantitative experts told reporters that if investors set parameters incorrectly, they may incur more losses as they split. For example, setting the split time too short may not be different from buying all at once, leading to higher costs due to the price being inflated. If the setting is too long, it might prolong the process unnecessarily and be influenced by market news. Splitting orders may also lead to regulatory risks. Compliance officials at securities firms revealed that if the split orders are too frequent or the amounts are too large, regulatory authorities may suspect market manipulation or evasion of large transaction reporting. Once under investigation, not only will trading be restricted, but fines may also be imposed. This article is a reprint from "Financial Association News," edited by GMTEight: Jiang Yuanhua.