Execution algos: VWAP, TWAP, POV, IS

Desks execute through standardized algorithms. Knowing them means anticipating their behavior, because an algo has no mood: it follows its rule until the end of the program.

Reading it on the tape

• Regular clips of identical size every N seconds: TWAP. You can almost set your watch by it, and predict the next one.
• A participation that grows with volume: POV. When the market accelerates, the algo accelerates too, which feeds the trend.
• A magnet around the average price: VWAP. Above it, the buying algo slows down; below it, it speeds up. That is why the VWAP "holds".
• An initial burst followed by calm: IS. The bulk is done, the rest will be worked slowly.