Did the client trade more, or did the market move?
Every week someone asks why a client’s volume changed. The tempting answer is a story about the client. Often the real answer is that the market moved and the client did what they always do.
I built a report that tries to tell those two apart. These are the checks it runs, in order.
1. Price
Volume is usually reported in dollars. If an asset is up twenty percent, a client trading the same number of units shows twenty percent more volume. Restate it in units, or at constant prices, before saying anything else.
2. Volatility
Active traders trade more when prices are moving. A quiet market lowers everyone’s volume at once. If the whole book is down by a similar amount, that isn’t a client story.
3. Count versus size
Split the change into the number of trades and the average trade size. More trades at the same size is a change in activity. The same number of trades at a larger size is something else, often a single large order.
4. Mix
Look at what changed underneath: which instruments, which products, which order types. A client who moves from one product to another can look flat in total while their behavior has changed completely.
5. Their own baseline
Compare the week with the client’s last eight, not only the prior one. Plenty of “drops” are a return to normal after an unusual week.
Only after those five do I look for a client-specific explanation, and by then there are far fewer to chase. The point of the order is to spend attention on the accounts where something real changed.
Opinions are my own, not my employer’s, and nothing here is investment advice.