Visitor Design Pattern
Application Example
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Outline
• Application
– Types of Traders
• Hedgers
• Speculators
• Arbitrageurs
– Trade Simulator
• Class hierarchy
• Adding a class
• Adding a method
• Visitor Pattern
– Design
– Analysis
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Trading
• Derivatives markets have been successful as they
attracted many types of traders and created a great
deal of liquidity.
– There are usually always investors willing to take two
sides of a contract.
• There three broad categories of traders:
– Hedgers use futures, forwards, and options to reduce the
risk from future movements in the market.
– Speculators use them to bet on the future direction of the
market.
– Arbitrageurs take offsetting positions in two or more
instruments to lock in a profit.
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Hedgers
• Hedging on options:
– An investor owns 1,000 Microsoft shares in May, 2000.
• He is concerned the antitrust case may cause the share price to
decline in two months.
– He buys a put option contract for with a strike price $65
and strike date in July 2000.
• It cost $2.50 per share = $2,500 for 1000 shares.
– The market price < $65
• Options are exercised for $65,000
– The amount realized is $65000-$2500=$62,500
– The market price > $65
• Options are not exercised
– The value of the holding is greater than $65,000-$2,500 = $62,500
– The hedger ensures that the value of his portfolio >
$62,500 by July, 2000
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Speculators
• Speculating on options
– In October the Cisco's share price is $20.
• A speculator considers the stock price likely to increase in two months.
• He is willing to spend $4,000
– He buys 4,000 two-month call options with a $25 strike price at $1.
– Say the hunch is correct and stock price is $35 in two months.
• The profit is 4000  ($35-$25) - $4,000 = $36,000
– The profit would be much smaller if buying the stock directly:
• 200  ($35-$20) = $3000
– Assume the market price is $15
• The loss is $4000 in case of options
• The loss is 200  ($20-$15) = $1,000 in case of buying the stock
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Arbitrageurs
• Locking in a riskless profit by entering transactions
in two markets:
– The same stock is trading on the NYSE at $152 and on
the London Stock Exchange at £100.
• The exchange rate is $1.550 per pound.
– An arbitrageur buys 100 shares in NY and sells them in
London
• The profit is 100  [($1.55  100) - $152] = $300 – (transaction
costs)
– Transaction costs would eliminate the profit for a small investor, but would
work for a large investor.
– Arbitrage opportunities cannot last for long.
• The forces of supply and demand will cause the prices to even
out.
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Trade Simulator
• Consider an application that simulates the market by
executing various trades.
• Such application depends on a pool of traders.
– We assume the traders are classified broadly into the types
discussed.
– Each trader is characterized by name, address, current
capital, etc.
– Each trader needs to be able to evaluate and possibly
execute different types of trades.
• The application needs a well defined class hierarchy
of traders.
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Trader Class Hierarchy
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Trader Hierarchy: Analysis
• Pros:
– Flexible in allowing to add another type of trader;
– All necessary information about a trade is encapsulated in a separate
class (Deal).
• A Deal class can have its own hierarchy
• Cons
– All Trader classes need to have access to the Deal definition.
• When the Deal interface changes all Trader classes need to be
recompiled.
– The actual operations of evaluating and executing a deal are spread
throughout subclasses implementation.
• Multiple files need to be updated when logic changes.
– Adding a new operation, to say compare two deals will cause adding
it to the whole hierarchy
• A solution is to move all operations to the Deal class.
– This class would be responsible for what to do for each concrete type.
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Trader Hierarchy with TraderVisitor
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TraderVisitor: Analysis
• TraderVisitor class implements virtual functions for
each Trader subclass.
– It can reuse any algorithm within the same class
hierarchy.
• The Trader hierarchy implements a unique bouncing
virtual function.
– Calls accept() to be invoked on a different subclass.
• The TraderVisitor hierarchy represents different
types of operations to be performed by Traders.
– It contains a Deal as a member data.
– One class is responsible for evaluating a deal, the other
one executes it.
– The result is reported by getStatus()
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Visitor Pattern: Analysis
• Intent
– Represents an operation to be performed on the elements
of an object structure. It lets define a new operation
without changing the classes of the elements on which it
operates.
• Applicability
– an object structure contains many classes with differing
interfaces, and operations performed depend on concrete
classes.
– many distinct and unrelated operations are performed on
objects.
• to avoid "polluting" the classes with operations.
– the classes rarely change, but new operations are often
added or modified.
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Visitor Pattern: Participants
• Visitor (TradeVisitor)
– Declares a visit operation on each class of the hierarchy. The
operation's name and signature is linked to the concrete subclass.
• ConcreteVisitor (EvaluatingVisitor)
– implements each operation declared by visitor. Each operation
implements a fragment or a particular algorithm.
• Element (Trader)
– defines an accept operation that takes a visitor as an argument.
• ConcreteElement (Hedger, ...)
– implements accept()
• ObjectStructure (MarketSimulator)
– provides an interface to allow the visitor to visit its elements.
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