Helloooo! I’ve just been reading through some old articles here and I found one which talked about the rise of High-Frequency trading from years ago. I looked it up and one of the interesting questions I encountered was if HFT is making forex markets less fair for retail traders. What do you guys think?
Isn’t that just the computers trading? But they trade every few seconds, no?
I don’t worry about it. I’m trading D1. I’m on a whole other planet!
High Frequency Traders has a lot of information I wish I could access and have access to the computers that they have
Citadel Group, a high-frequency trading firm located in Chicago, trades more stocks each day than the floor of the NYSE.
We can’t do anything about it! But we are peanuts compared to institutions and these guys.
True, they make their money on volume, making small change on every trade, but when you do 24 million shares in 2 minutes, it adds up to millions of dollars per day.
And it’s nothing new. Since trading when to all digital, I’m sure the powers behind some of funds and firms started looking for another edge. Speed, but just a different kind.
It’s hard to compete with a company worth billions in HFT, I have seen online sites that only sell dreams rather than reality.
I think Scalpers are consider the retail equivalent of high-frequency traders
What do I think? Well when the biggest trading houses rent real estate as close to the datacentres in which the NYSE servers are located, this is a serious business. The robots used to work on microseconds, and now work on nanoseconds. I think it is very smart that the biggest bourses use circuit breakers to halt trading if markets fall too quickly, but once that robotic turmoil starts, it is hard to stop. The next flash crash could wipe out many a pension fund. The rocket scientists always think they know what they are doing.
A sober book on this subject is The (Mis)Behaviour of Markets - a fractal view of risk, ruin and reward, by Benoit Mandelbrot. He won a nobel prize, not for mathematics of the Mandelbrot series of fractals, but for his service to the financial world in warning that the industry has totally underestimated the likelihood of black swan events.
I met a guy once who worked for one of the big banks in NYC and he said his job there was to set up their trading algorithm (he descirbed it like some box) that the math dudes worked on and then all he had to do was turn it on and off at the beginning and the end of the day lol. He wrote a script for it and barely had to do anything during the work day.
I think this is kinda what took the Silicon Valley bank down in the US. Social media got word about the bank being undercapitalized or having too much debt in one sector, and account holders chatted each other up and withdrew billions in a couple hours. It only takes minutes to get the word out. Not sure how banks and similar businesses can deal with that, unless they just stop withdrawals automatically after some limit gets reached. That’s not even nanoseconds.
automated trading using metatrader that is using an android hotspot net connection is light years faster than entering trades by hand.
high speed trading is actually more hype than anything.
nothing beats a well executed trade that gets closed properly.