The Prop Trader's Chronicles: Short-Term Proprietary Trading Strategies for Both Bull and Bear Markets

KNIGHT CAPITAL GROUP'S DARK POOL ROUTES

Knight Capital Group, which had also been an instrumental part of the Direct Edge exchange's history, offers a selection of algorithmic dark liquidity seeking routes available on most direct access trading platforms.

Knight FAN (also known as NITEFAN): FAN is an algorithmic strategy offered by Knight Capital Group's Algorithmic Suite. FAN aggregates public and dark liquidity so that a trader's orders will sweep and post simultaneously to both types of venues for efficient order execution. Using Knight's smart order execution algorithm, FAN adapts to real-time trade executions and recirculates an order to the destinations where recent trade volume had taken place to optimize the chances of filling the order.

Knight COVERT: COVERT is a dark liquidity-only version of the FAN algorithm, and is also part of Knight Capital Group's Algorithmic Suite. Like FAN, COVERT also sweeps and posts to multiple venues using Knight's smart order execution algorithm, which considers recent trade volumes. The main differences is that while FAN will interact with both displayed and non-displayed liquidity venues, COVERT will only interact with dark (non-displayed) venues such as dark pools. COVERT is more likely to be used when avoiding the potential of exposing your trade size is a greater priority than getting your order filled as quickly and efficiently as possible. (FAN, on the other hand, would be the better choice to a large-sized trader if execution is ...