TED on HFT
My apologies to the HFT crowd and those in know as this video will be very much an informative rehash for you. That said, I know there are a lot of prospective monkeys here with questions about high frequency trading. Many others struggle in your debates, arguments and discussions with non-industry folks as to what HFT really is and how it has changed the market game. In hopes of getting some of you thinking and talking about the subject in greater detail here's a brief primer. By no means exhaustive or close to all encompassing, hopefully it can answer some of the basic questions you guys have been asking. Enjoy.
From knowing people in the industry here's a bit more light:
can you elaborate a bit more on the point about the miles equation? what is it and what is its connection to hft?
In simple terms "If you ping at the spread enough times you will eventually find yourself selling at the ask and buying at the bid".
McGill > Concordia! :)
Thanks for this! I knew very little about HFT, but this video helped me gain a good insight.
Barboon, can you explain the market making rebates?
On some exchanges, you get paid to put liquidity into the market, and you pay to remove it.
Also, market makers typically get a better deal from the exchange. If they make a certain number of quotes, within a certain spread they get either zero fees or some other incentive to do so.
Thanks for saving me the troubles.
HAL: "It can only be attributable to human error."
Will people PLEASE apply some commoke to n sense to this hyberbole.
75% of trades are done by algorithms? THEY ARE TRADING AGAINST EACH OTHER BY DEFINITION.
trades are done by machines not humans. Eh? Is this even a point
I see opportunities as a human trader. I'd like to trade them, but its easier if i get a computer to do it for me. You don't use stop losses? I still set the limits, ALL the computer does, is what i want to be able to do, just a hell of a lot quicker. It isn't skynet, it's not some machine that makes money for the machine invasion. It's written by humans for humans. I don't see people complaining when machines make their calculations or communications easier, but when someone else uses it to make money in a way the dont understand or dont like to compete against because it's not cricket, they get all upset.
I'll let you in on one big secret.
A lot of big HFT shops have been losing money hand over fist because the infrastructure required to keep up with this game is immense and ridiculously expensive. Imagine upgrading your computer every time intel releases a chip, or ripping up your entire copper wire network because fibreoptics comes out. If you play the latency game, these updates are mandatory. Just because the trades they make are very low risk and generate high revenues there are still costs involved.
As I said, lots of shops have lost money, and pulled out of this game, because of it. Get busy living or get busy dying.
this is old news. read the recent economist's article from Bank of England. They compete in petasecond now. thoughts: 1) Buy some dirt cheap deep out of the money index put option 2) Learn to trade OTC products where machine won't be able to take your job.
So... what? I have no problem making money trading... yet.
Well that was a boring TED...
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