Time Weighted Average Price (TWAP) is the weighted average price of any product over a specific time, as opposed to Volume Weighted Average Price (VWAP) which is volume based. TWAP is essentially algorithm trading which is guided by complex and advanced mathematical formulas and models to make quick and best possible decisions from financial markets online cryotocurrency trading. It is used in trading algorithms mainly by large institutional investors to execute bigger transactions without necessarily affecting the general market.
The TWAP algorithm is used by most cryptocurrency investors to find out the demand and supply rate of a product. Because TWAP is an algorithmic trading app which deals essentially with time, it poses a great opportunity to increase the profit and volume of cryptocurrency that is invested for online cryptocurrency traders. Before investing in online cryptocurrency, it is important to be informed about how to use TWAP and about its pros and cons.
Making profits in Online Crypto Trading can be achieved by executing simple but highly effective algorithms. The TWAP order is extremely practical and functional as it targets financial goals and applies specific functions throughout the customized time length. The TWAP order carries out its execution with the random and frequent buying and selling of the cryptocurrency to ensure profitable trading at the end of the time cycle. When TWAP orders are executed on Crypto exchange over a short time frame, it becomes very lucrative.
The pros of TWAP include:
TWAP is designed in such a way that it eliminates the possibility of errors prone to be committed by humans in trading. This is achieved by its systematic approach of scattered execution of order within a given time frame and the back-testing of the feasibility of the formulas and models being used.
2. Time and Cost Minimization
TWAP ensures that money, time and stress during trading is minimized to increase profit. This is because it is self-monitoring and prevents traders from making constant follow ups on the stocks.