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Is speed the problem for high frequency trading?

(Last Updated On: April 12, 2012)

Is speed the problem for high frequency trading?

Over the last two centuries, technological advantages have allowed some traders to be faster than others. In the paper linked below we argue that, contrary to popular perception, speed is not the defining characteristic that sets High Frequency Trading (HFT) apart. HFT is the natural evolution of a new trading paradigm that is characterized by strategic decisions made in a volume-clock metric. Even if the speed advantage disappears, HFT will evolve to continue exploiting Low Frequency Trading’s (LFT) structural weaknesses. However, LFT practitioners are not defenseless against HFT players, and we offer options that can help them survive and adapt to this new environment.The Volume Clock: Insights into the High Frequency Paradigm papers.ssrn.comOver the last two centuries, technological advantages have allowed some traders to be faster than others. We argue that, contrary to popular perception, speed…
==Superior paper! Worth the read.
Check the “pack-hunter” scenario on page 7. One added thought – the packs don’t need to coordinate…cf A Krause, A Guerdjikova, and others on CBDT. i.e. herding without following the herd

 

 

NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

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