Reviewed by Oct 05, 2020| Updated on
The blotter is a trade record and details of trades performed over some time (usually one trading day). Trade details will include things, such as time, price, order size, and whether it was a purchase or sell order. Often, the blotter is created through a trading software program, which records the trades made through a data feed.
A trade blotter aims to carefully record trades so that a trader or brokerage firm can review and confirm them. The blotter is used in stock markets, foreign exchange, and bond markets. It can be tailored according to the user’s needs. Even for the futures and commodity market, trading blotter is used.
A broker typically offers a blotter as a software program for its traders. A blotter specifies what security was sold, the date of selling, and the amount and price of sale or purchase. It also defines the market in which the trading took place and whether it was a buy or sell.
The blotter also depicts whether a trade was properly settled and includes orders that were entered but cancelled before they were filled out. The trader will decide what data will be shown on the blotter. A broker uses a blotter to keep track of all transactions in case any issue arises with a trade.
Traders who use a blotter to develop their trading techniques and strategies may use it with or instead of a trading journal. Traders will usually use the blotter at the end of a trading day to assess how well they have done. The blotter may be sorted by revising areas in which he/she should have done better, such as timing with entries and exits.
Stock exchange regulators also sort the blotter to detect whether there has been any illegal trading. The sorting can be carried out in numerous ways to reveal any trade discrepancies. Trading blotters are used by businesses during a stock exchange audit to display a record of their transactions by the form of investment. A separate trading blotter, for example, would be used for equities, and another for fixed-income securities, and so on.
Blotters might also show some portfolio managers’ favouritism in selecting customers. They choose certain customer accounts on the blotter that often have profitable trades. Alternatively, they want customer accounts that have significantly different buying or selling prices of the same security.