Introducing order management and execution
Up to this point, all we have done is set the stage for the main task of a Robo-advisor – to make investments. In one sense, it sounds quite simple. We simply make an order and send it to a broker who executes that order – kind of like ordering food in a restaurant. In reality, it is more complicated, as there are a lot of moving parts involved when we wish to automate the entire process. We will break down the steps involved in the next few sections.
Price feed
Before we can place an order, it seems logical that we would need a price list, just like a menu at a restaurant. In finance, we call this a price feed. For the specific needs of a Robo-advisor, our needs are rather simple compared to real-time stock trading or advanced institutional trading. All we really need is a list of products and a single price for each day. The reason for this is that we will be executing our trades only once per day, not in real time. This...
