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High Frequency Trading Chapter One Supplement. What is it? HFT – Algo trading – Auto market maker – Program Trading Fast trading – How quickly By micro.

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Presentation on theme: "High Frequency Trading Chapter One Supplement. What is it? HFT – Algo trading – Auto market maker – Program Trading Fast trading – How quickly By micro."— Presentation transcript:

1 High Frequency Trading Chapter One Supplement

2 What is it? HFT – 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.

3 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

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

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