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High Frequency Trading 101: Pros vs Cons (Part 3/3)

10/9/2015

 
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Using the context of a USDA Supply and Demand report for the grain market, I’ll be exploring the pros and cons of HFT for the everyday farmer/investor.  If you’ve found yourself pondering the following questions, then this article is for you:
1.       How do those machines interpret and react to the report results so fast?
2.       Why does the market react so strongly to news that doesn’t seem to illicit such a response?
3.       Overall, does HFT make life more difficult for farmers?

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High Frequency Trading 101: Strategies & Players (Part 2/3)

7/19/2015

 
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Liquidity – The degree to which an asset or security can be bought or sold in the market without affecting the asset’s price; Characterized by a high level of trading activity.
                                                                                                                                           Source: Investopedia
Liquidity is the most pivotal element of HFT (High frequency trading) vocabulary. Without it, most profit opportunities in high frequency would be gone. The name of the game is getting in and out quickly while minimizing risk and collecting as much edge (profit) as possible. In this article, we’ll go over several HFT strategies that revolve around this idea, and the biggest users of such strategies.

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High Frequency Trading 101: Background Knowledge (Part 1/3)

7/7/2015

 
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How fast is the speed of light? How many feet between Chicago and New York? These are need to know questions for trading infrastructure specialists that get information to high frequency traders. One such infrastructure specialist, Spread, estimates that every extra foot of fiber-optic cable adds about 1.5 nanoseconds of delay and each mile equates to an extra 8 microseconds. Just as a reminder, there are 1,000 milliseconds in a second, 1,000 microseconds in a millisecond, and 1,000 nanoseconds in a microsecond. So, if you blink, you may miss thousands of trades.

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*Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.
Photos used under Creative Commons from AllieKF, Rotherz67,thanks for 1.1 million views........., MojoBaer, pictures of money, ordjuret, smithbetty579, Philip Taylor PT, manoftaste.de, ** RCB **, James St. John, UnitedSoybeanBoard, Leonard John Matthews, voinonen, Scott McLeod, healthiermi