Trade Recommendations

Trade Desirability

As stated in the glossary, tradeDesirability is :

A calculated value derived from tradeDesirabilityUnrestricted as the lesser value of that value and tradeScoreCap.

Values of "tradeDesirability" for all trades examined may be viewed on the tradeReport via the "View|Trade Desirability" selection on the tradeMenu.

The best three trades ranked by "tradeDesirability" may be displayed in the bestTradesReportBox (which will report "tradeDesirability" via the "by tradeDesirability" selection on the tradeMenu|Reports|BestTrades popup menu.

This value is also reported by the tradeEvaluationReportBox.

tradeDesirabilityUnrestricted is:

A calculated value which attempts to rank the possible trades by comparing the available improvement inherent in the trade to that which is required, i.e.

tradeDesirability = 100 * bidToOfferPickup / totalRequiredPickup

Note that in contrast to tradeScoreUnrestricted, there is no scaling in this measure and no information is inherent it regarding how close the trade might be if it is not, in fact, desirable at bid to full-offer prices.

This value is used in the further determination of tradeDesirability

Values of "tradeDesirabilityUnrestricted" are reported in the bestTradesReportBox and the tradeEvaluationReportBox.

tradeScoreCap is:

An optimizableParameter with the identifier PARAMETER_TRADING_TRADESCORECAP used in the calculation of tradeScore to limit the tradeScoreUnrestricted (and also in the calculation of tradeDesirability to limit the value of tradeDesirabilityUnrestricted) that would otherwise be used in subsequent calculations.

The value of this parameter is constrained to be greater than 100.0.

This parameter is reported in the analyticalParametersReportBox.

Clearly, the two most important elements to understand about tradeDesirability are bidToOfferPickup and totalRequiredPickup. The former is a numeric indicator of the increase in tradingValuation (see the glossary, tradingValuationBid and tradingValuationAsk) we may expect if we sell at the bid and buy at the offer, while the latter is a measure of how much improvement in valuation is required to account for commissions and uncertainty while still being a trade that is worth-while. tradeDesirability is the measure, as a percentage, of how much of the requirement is covered by the trade when determined from bid to the offering price.

tradeDesirability has two major weaknesses as an "all-in-one" number:

• It does not account for the importance of the trade to the overall portfolio - to measure this, we use weightedTradeDesirability
• It provides no scale as to whether trade is attractive anywhere inside the market quotations - to measure this, we use tradeScore

Important values mentioned in this page may be verified using the following reports:

Value	Reported on	Via Menu
bidToOfferPickup	pickupCalculationBox	tradeReportContextMenu (right-click the appropriate grid element on the tradeDocument
totalRequiredPickup	tradeEvaluationReport	tradeReportContextMenu (right-click the appropriate grid element on the tradeDocument
tradingValuationBid	riskRewardAnalysisBox	tradeReportContextMenu (right-click the appropriate grid element on the tradeDocument
tradingValuationAsk	riskRewardAnalysisBox	tradeReportContextMenu (right-click the appropriate grid element on the tradeDocument