How high frequency trading works



High frequency trading has roiled the stock and bond markets. The machines have taken over, and they can do far more business than a human can. But HFT has plenty of risk attached, as this short video explains.

Comments

  1. Holy shit. scary stuff and very unfair for retail traders then:(
  2. Thanks for this video.
  3. other hfts take advantage of these flash and the dominant hfts win and other hft lose lol
  4. high frequency traidng are lol they just see the retail pplz participation and they execute the order before the retail bid reach the exchange lol,nothing much ,without retail involvement hft will never work
  5. @EricHunsader 's explanations are much better.
  6. wer u frum u sond belfist]
  7. great video and well explained ,   thanks
  8. bngn
  9. Easy and sure strategy for new and old traders on binary options to make progress in trading==>> (Details Here >>> https://plus.google.com/u/1/102135744004462700008/posts/TyEZS9GsAQo ). It has a consistent winning strategy that will help you recover previous loss in binary options quicker than you expected.
  10. Fantastic job on the presentation, articulate and concise. Thank you.
  11. cross market spreads is best way to make money !!!
  12. If you're focusing only on the broad strokes, this video is informative. However, a lot of the specific examples used were weak. For example, institutional clients would be buying a hell of a lot more than 1000 shares of GE. Also, considering the average volume, average liquidity at any given moment, and the penny spread you're likely going to see on names like GE, no one in their right mind would bother with a limit order $0.50 higher than the current ask. However, marketable limit orders on legitimately large orders (relative to available liquidity) happen all the time. Also, pretty much everything said about flash orders is badly worded, as seems to imply something that does not occur on the street. If an exchange accepts a marketable limit order from a client who wants to buy at $25 or better, that client is entitled to the best asking price for at least the size displayed, and any subsequent asking prices that are still below $25 ('marketable limit order' implies the best asking price is already lower). Let's say the best asking price is $24.89. The exchange CANNOT FILL THE CLIENT by flashing that order internally and letting a trader's algo sell to the client at $25.00. If the venue is willing to match that best asking price, they can cross it internally, and print the client at $24.89 without crossing the ask, and that's completely legal. They could even price improve the order by fractions of a cent (e.g. print @ $24.8895), and not bother crossing the ask either. They would typically only price improve in this manner if they didn't want to bust up a larger sell limit likely on their books which would have had priority.

    The legal front-running that goes on at HFT shops is all about speed. Co-location and crazy fast data connections provide this speed. Algos with Auto MMs decipher a large incoming trade by looking for the patterns (there are other, often times less scrupulous, methods used to know a large order is coming). Then, because they know the real price of the current market (speed matters here too, as HFT shops have a more up to date bid/ask spread, by often times less than a second, but that's all it takes), they will take advantage if there's an available beneficial riskless arbitrage situation (i.e. almost instantaneously buying lower at the real asking price to sell back higher to the client who's pattern they deciphered at what that client thinks the asking price is, or selling short higher at the real bid price and then buying from that client lower at what that client thinks the bid is). The price difference on these trades is often $0.01 or less per share, but the average trade size for these HFT shops is probably around 100 shares, and they can do it so frequently (back when there was less competition, millions of times a day), that they make boatloads of money.
  13. Go read Flash Boy's by Brad Katsuyama. It will correlate with this video well
  14. Nice video.
  15. Very helpful. Thank You.
  16. As a programmer / software engineer I enjoyed your explanation
  17. 9:55 who is paying them the fees and what are their reasons to do it?
  18. Traders can’t jump in and out of binary options’ orders by impulse or ruled by emotions--they should build and design a trading plan from the ground up and research every single asset they think about investing with in order to maximize profits and minimize losses. Here is a solution==>>( Details Here >>> https://t.co/OPzdxLDfKb ). This will be helpful for both novice and pro traders.
  19. Thank you for this very interesting video... so, my question are, if this is the case , why are there still lots of traders if they can't win as you said... And how much have been banned till today of these mean servers??


Additional Information:

Visibility: 179445

Duration: 11m 29s

Rating: 1112