Trading - TWAPs

TWAP Orders

TWAP (Time-Weighted Average Price) orders are a sophisticated trading strategy now available on the Elektrik platform, designed to minimize market impact and execute large orders over a specified period. This feature allows you to break down a large order into smaller chunks that are executed at regular intervals. The goal is to achieve an average execution price close to the market average over the duration of the order, reducing the potential for significant price swings due to large trades.

How TWAP Orders Work

TWAP orders are particularly useful in situations where you want to execute large trades without causing a noticeable impact on the market price. By distributing the trade over time, the TWAP strategy ensures that the trade is more likely to blend in with normal market activity, resulting in a price closer to the market’s time-weighted average.

When you place a TWAP order on Elektrik, the platform automatically manages the order execution based on your specified parameters. The platform divides your total order into smaller, evenly distributed sub-orders. These sub-orders are then executed at regular intervals over the period you’ve chosen, ensuring a smoother entry or exit from a position.

Steps to Start Trading with TWAP Orders

To start trading using TWAP orders on the Elektrik platform, follow these steps:

1. Create a Safe Wallet

Begin by creating a Safe wallet using the following link: Create Safe Wallet. This wallet is essential for securely managing your funds and executing TWAP orders.

2. Set Up a Custom App to Access Elektrik TWAP Orders

Next, you need to set up a custom app to access Elektrik TWAP orders. Use this link to configure your app: Elektrik TWAP Orders. This custom app will allow you to interact with the Elektrik platform and manage your TWAP orders directly from your Safe dashboard.

3. Add Funds

To start trading, you’ll need to add funds to your Safe wallet. Ensure you have enough WETH (Wrapped Ether) or other tokens for trading. This step is crucial to ensure smooth execution of your TWAP orders. Fees will be collected from the wallet you used to create the safe wallet.

4. Navigate to TWAP Orders in the Elektrik App

Once your funds are in place, navigate to the Elektrik app within your Safe dashboard. From there, access the TWAP Orders section where you can start configuring your orders.

5. Complete the Initial Setup

Before you start trading, there are two important setup steps to complete:

• Step 1: Setting up the Fallback Handler

The Fallback Handler is a smart contract feature that manages unexpected or undefined transactions. This step ensures that non-standard interactions with the Gnosis Safe contract are handled securely, preventing vulnerabilities or unintended behavior. This setup acts as a safety net for your trading activities

After pressing Execute, please wait until all the confirmation steps go through, as this might take time.

• Step 2: Setting up the DApp as a Verified Domain

To enhance security, set up the domain verifier, which ensures that specific smart contract interactions or transaction proposals are associated with the correct domain—in this case, the Elektrik DApp domain: Elektrik DApp. This setup prevents phishing attacks by verifying that the transaction you’re about to sign originates from the correct and expected domain.

Please follow the same prompts as in Step 1 to Execute and process the transaction.

6. Start Trading

With everything set up, you’re now ready to start trading using TWAP orders on the Elektrik platform. Navigate to the TWAP Orders section, configure your order parameters, and let the Elektrik platform manage the execution, ensuring an optimized trading experience.

Each transaction will open up a Safe window to confirm the transaction, similar to previous steps. You would need to confirm the transaction in the page and wait until it is processed and indexed.

This new feature empowers traders with advanced tools to manage large orders more effectively, mitigating market impact and improving overall execution quality. For more detailed information on TWAP orders and their benefits, refer to the Elektrik documentation and ensure you’re fully equipped to leverage this powerful trading strategy.