Automatizing Price Negotiation in Commodities Markets

Fodil Laib () and Ms Radjef

MPRA Paper from University Library of Munich, Germany

Abstract: This is an introductory work to trade automatization of the futures market, so far operated by human traders. We are not focusing on maximizing individual profits of any trader as done in many studies, but rather we try to build a stable electronic trading system allowing to obtain a fair price, based on supply and demand dynamics, in order to avoid speculative bubbles and crashes. In our setup, producers and consumers release regularly their forecasts of output and consumption respectively. Automated traders will use this information to negotiate price of the underlying commodity. We suggested a set of analytical criteria allowing to measure the efficiency of the automatic trading strategy in respect to market stability.

Keywords: Automated Traders; Optimal Strategies; Futures Market; Commodities Trading (search for similar items in EconPapers)
JEL-codes: C63 C73 D81 (search for similar items in EconPapers)
Date: 2010-05-24
New Economics Papers: this item is included in nep-mic and nep-mst
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:28277

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