High Frequency Trading

High Frequency Trading

High Frequency Trading (HFT) is a powerful investment force in modern financial markets. This trading platform uses complex computerised algorithms to analyse multiple markets, executing orders based on market conditions.

What makes HFT unique is high-frequency turnover of positions, ultra-low latency connections and powerful computers that enable a large number of orders to be transacted in fractions of a second – faster than any human, faster than the average computer. Typically, traders with the fastest execution speeds will be more profitable than traders with slower execution speeds.

The tremendous processing ability and speed of HFT makes HFT players among the most effective and powerful trading specialists in the industry.

Some interesting facts about HFT

70 %

HFT accounts for an estimated 70% of all US equity trading volume as of 2014

US$
201
billion

Assets under management for hedge funds with HFT strategies is around US$201 billion

50 %

In Europe, HFT accounts for 50% of equity order volume and in Asia, 15% with potential for rapid growth

3 types of HFT firms

Proprietary firms

HFT trading using private money and different strategies

Broker-dealer proprietary desks

Firms with separate HFT desks, e.g. large investment banks

Hedge funds

Invest using common HFT strategies

  • Broker-Dealer Proprietary Desks 48%

  • Hedge Funds 6%

  • Independent Proprietary Firms 46%

A super-engineered, fortune-seeking electronic brain at your command

How HFT Works

Designed and optimised to make profits in milisecond

The high frequency trading model consists of two major parts, the trading software and computer hardware. The software algorithm must be sophisticated enough to analyse all kinds of market news and data, and subsequently make accurate trading decisions.

HFT firms engage math geniuses and other smart people to ensure the software performs its function as efficiently as possible. We also constantly seek innovative ways to optimise our strategies, detect and take advantage of market opportunities.

newspaper

Popular HFT strategies

Event arbitrage

It take advantage of certain predictable events to generate short-term profits.

News based trading

The system processes news feeds from various sources and act on the information before it appears on-screen to the general public.

Machines talented enough to see a thousand opportunities in seconds

HFT Advantages

How fast can HFT be?

The system moves so fast, its actions are practically invisible. This enables HF traders to move ahead of the market to take advantage of the tiniest window of opportunity. In the exclusive world of high frequency trading, there are no speed limits.

IBM-Supercomputer

HFT Profits at a Glance

HFT computers can move in and out of trading positions in milliseconds.

It aim to capture sometimes a fraction of a cent on every trade.

It make up for the low margins with high volumes of trades, usually in the millions.

HFT do not consume large amounts of capital, accumulate positions or hold portfolios overnight.

HFT algorithms can scan dozes of public and private market places simultaneously. They can spot trends, change orders and strategies within milliseconds.

It also gain a major speed advantage by placing servers next to the exchange servers.

HFT firms enjoy direct market access through Exchange/Prime Brokerage.

nasdaq_stock_market_new_york-HD