Portfolio trading involves the execution of a basket of securities simultaneously. Compared to trading multiple securities independently, portfolio traders must consider a number of additional execution objectives in their decision-making process, such as minimizing risks, obtaining cash targets, and investing in multipleasset classes. For example, a portfolio strategy might require that securities in similar sectors remain hedged in order to reduce systematic risk; or have special funding needs to execute buys and sells in a dollar-neutral fashion; or involve equitizing cash by trading future contracts along side with equities. All of these complex and often conflicting objectives make portfolio trading inherently challenging.
