The Impact of Market Conditions on Optimal Executions of Market Transaсtions

This diploma examines how market conditions affect the most effective way to carry out market transactions, combining academic knowledge with practical investigation. The study investigates the impact of market volatility, liquidity, GDP growth, unemployment rate, and Treasury yields on transaction costs and execution efficiency. Analyzed were historical data from S&P 500 businesses over a five-year period using a pooled OLS regression model with heteroskedasticity-robust standard errors. The results indicate that increased market volatility and unemployment rates have a considerable positive effect on transaction costs, whereas higher liquidity and Treasury yields have a negative effect on these costs. The growth of GDP demonstrates a subtle impact, indicating a rise in trading activity during times of economic growth, which subsequently affects the costs of transactions. The empirical findings are consistent with the theoretical frameworks proposed by Almgren and Chriss (2000) and Bessembinder (2010), confirming the substantial influence of market conditions on the quality of trade execution. These observations highlight the importance for traders and portfolio managers to adjust their tactics according to current market conditions in order to reduce expenses and improve the efficiency of executing trades. This will lead to a deeper understanding of market dynamics and the adoption of optimal trading methods.