Those who are familiar with the stock market and stock trading won’t need to be introduced to smart order routing. Smart order routing is an order that goes from the user to an exchange. Users may be customers, but some orders may have to go through a broker first. The broker will then turn it over to an exchange.
Smart Order routing aims to give an automated feel to the process of handling orders and routing from the user to the exchange. Since Bitcoin made entry into the mainstream years ago, it has been traded on different trading platforms. By virtue of this, its prices have experienced some up and down surges.
What smart order routing does for a potential investor in Bitcoin is that it relies on a system of rules or algorithms to analyze the various platforms and exchanges. It will then help find the best price, place orders in maximized form, and save the investor a lot of cost, stress, and anxiety. It’s also called the "best execution" in the Bitcoin market because of its effectiveness.
The smart order routine does the hard work essentially. It searches the various platforms to find the best price while taking into consideration the size of the order, its type, and its impact on the market. It does a lot of work with little effort or fuss.
Previously, Bitcoin investors were forced to manually search numerous exchange sites to get the best price for Bitcoin. Since it has a volatile nature, investors must research their trades before investing. This has also forced some investors to open and operate multiple accounts with various exchange sites. The whole process isn’t easy, but Bitcoin’s smart order routing will make the process easier with a simple computer command. Bitcoin’s trading liquidity has never been easier.
Let us briefly discuss some pros and cons of Bitcoin’s smart order routing.
Advantages of Bitcoin’s Smart Order Routing
• With Bitcoin’s smart order routing, you can be sure of getting the best price of the digital currency without the stress of searching for the best price manually. The entire process is automated, so you are sure to achieve a considerable measure of success.
• There is no need to have multiple accounts with various exchanges as smart order routing will give access to virtually all available exchanges simultaneously.
• Bitcoin’s smart order routing provides ample opportunity or platform for the use of specially designed algorithms.
• You have free access to market and trading stats, which gives the investor a measure of control.
Disadvantages of Bitcoin’s Smart Order Routing
• It comes with a slight disadvantage of transparency. To make the best business move, it is best to hold on to vital information which will give you an advantage over your competitors. But all the information on Bitcoin’s smart order routing is there for all to see.
• Since it is automated, you get a good handle of how it works, its technological complexity, how and when to take needed steps. If a wrong step is taken, it can result in a shock loss of assets.