No matter who you are or what industry you happen to be a part of, chances are you have an uneasy relationship with technology. As tech sectors advance and bring incredible innovations, we also feel the effects of a life that's becoming more automated. And while these innovations are undoubtedly helpful at large, they come with a cost.
In the RIA space, trading is often seen as just another box to check, rather than a critical component deserving of focused attention. This approach often fails to recognize the substantial influence that thoughtful trading practices can have on performance. At UX Wealth Partners, we understand that the quality of execution and astute order management are pivotal to successful investing, accessible not only to big banks and major institutions. Our trading desk operates with precision and efficiency to offer our clients an experience on par with institutional standards. Join us to discover how our expertise can enhance your investment strategy.
Consider this scenario: Below are snapshots of an order we executed for a client. We sold just shy of 17,000 shares of $MLKN, a seemingly small order but nonetheless important. A rapid and informed analysis of market structure—specifically, the available depth and liquidity of the security in question—is vital. Once we have the order, we expedite the process, minimizing delay and working the order promptly. We are immediately aiming for best execution, while the market reacts just as swiftly.
When we execute orders, benchmarks and metrics come into play to show the efficiency of our execution relative to other market activity for that security. Here is a snapshot illustrating some of these metrics.
The strategy used to execute the trade, the efficiency of liquidity sourcing, and the market environment all influence the execution quality. When this quality translates directly into dollars, it warrants our concentrated attention.
Now, let’s delve into the specifics of our executed order flow and its impact on market price. Observing the lifecycle of our trade and the behavior of the security during our trading window offers critical insights. Below is a snapshot of $MLKN’s chart during our trade execution, with a descriptive caption below for further explanation.
Green Arrow (Upper Left): When the trade started
Red Arrow (Right): When the trade finished
Red Horizontal line: Arrival price (price of security when the order was received)
Light Blue Line: VWAP (Volume Weighted Average Price of the security)
Red line: Interval VWAP (VWAP of security from the start of the trade, to the completion of the trade)
Purple dots: executions that made up the trade
Volume Bars (Bottom): Red indicates what volume our executions were versus the total volume
From these snapshots, we identify key takeaways. Notably, our order flow constituted over 30% of the volume for the security at the time of execution. Moreover, our average execution price was better than the interval VWAP. VWAP is a basic benchmark in trading, and achieving an average execution price below VWAP for buyers, or above for sellers, during a trade indicates favorable performance.
While the impact in this example might seem minor, it represents just one of the thousands of orders—varied in size and complexity—that we process routinely for our clients. Our trading desk leverages technology to adeptly navigate various trading environments and adjust strategies to mitigate adverse market impact. Achieving quality execution is a fundamental part of our commitment to our clients’ interests.
To truly understand how UX Wealth Partners' trading desk can enhance your client outcomes, I invite you to continue the conversation with us. We’ve only just begun to explore the depth of our capabilities.
Investors should be aware that all trading involves costs, including the implicit cost associated with market impact and participation. While UX Wealth Partners strives to minimize these costs, market impact is an inherent aspect of trade execution. Achieving an execution price better than the Volume Weighted Average Price (VWAP) is a target, but not guaranteed. Past performance in relation to VWAP does not predict or guarantee similar outcomes in future transactions. Past performance is not indicative of future performance. The strategies employed to execute trades are carefully selected based on prevailing market conditions and the specifics of the order. However, there is no single strategy that is best for all situations, and outcomes can vary. UX Wealth Partners is committed to best execution. This means that while we cannot ensure the lowest possible cost in all circumstances, we constantly aim to optimize trade execution in favor of our clients. The financial markets can be volatile and unpredictable. UX Wealth Partners’ trading desk responds dynamically to changing market conditions, which can affect trade execution and outcomes. While our technology and order management systems are designed to facilitate efficient trade execution, system effectiveness is subject to market conditions, system performance, and other factors. The timing of order execution is subject to various factors, including but not limited to, order size, market liquidity, and the specifics of the client's instructions. Delays may occur despite our efforts to execute orders promptly. UX Wealth Partners regularly reviews trade execution quality to ensure consistent delivery of our service standards.
UX Wealth Partners LLC (“UX Wealth”) is an investment adviser registered with the Securities and Exchange Commission (SEC). The information found this website is for general information purpose only and should not be considered a solicitation to engage in any particular securities transaction or an offering of personalized investment advice over the internet. Any subsequent, direct communication by UX Wealth to a prospective client will be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. No warranty or representation, whether express or implied, is being made regarding the completeness, reliability or accuracy of the information or data is provided herein