V. Belitsky

  1. A non-linear model of trading mechanism on a financial market.

    Authors: N. Vvedenskaya, Y. Suhov, V. Belitsky
    Subjects: Trading and Market Microstructure
    Abstract

    We introduce a prototype model in an attempt to capture some aspects of
    market dynamics simulating a trading mechanism. The model description starts
    with a discrete-space, continuous-time Markov process describing arrival and
    movement of orders with different prices. We then perform a re-scaling
    procedure leading to a deterministic dynamical system controlled by non-linear
    ordinary differential equations (ODEs). This allows us to introduce
    approximations for the equilibrium distribution of the model represented by
    fixed points of deterministic dynamics.

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