High Frequency Trading

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Presentation transcript:

High Frequency Trading Chapter One Supplement

What is it? HFT Fast trading Server is close to exchange Expensive Algo trading Auto market maker Program Trading Fast trading How quickly By micro seconds Fast program and fast brain Server is close to exchange Expensive Fast computer Fast programs Intelligent people that create it.

How does it work? Imagine you want to buy 1000 shares of WMT or GOOGLE Your order could be revealed by HFT programs HFT buys out the whole market in a split of second Sell to you and other buyers @ manipulated price

WHY investment banks invest in HFT? Lots of trades and huge money from liquidity rebate Does HFT provide liquidity and real service?