I myself have worked at a fund and know what’s going on under the hood.
I know and have seen it myself, some strategies are very simple in terms of the rational rules that the strategy follows. It can be easy and well-defined concepts that we all know about, what’s makes a big difference is the way the strategy is executed. When we talk about executing large volumes new aspects come into play that totally takes a simple base strategy into a complex and sophisticated algorithm.
The cost of carrying out their business: Imagine the cost of making thousands of transactions with large volumes? Hence there is a big advantage to come up with executing- models that aim to execute trades as cheaply as possible. So trading firms/institutions spend enormous resources in forecasting the future volume, future price moves, and their own impact on the market. All these factors together will determine when and at what price they will buy or sell according to their base strategy.
In addition, the firms do not want to expose their trading strategies, so the challenge is to act/execute so that it is not visible how they think. To execute large business volumes without them being too clear to other players is a big challenge.
So on top of their base strategy, institutions have models that determine when and at what price they actually can execute trades, combined with models that only focus on hiding their impact. Since, once again, it’s very challenging to execute large volumes in a market without having an impact. If a strategy has a clear impact on the market, the strategy itself can be traced and detected by other firms.