High Frenquency trading
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A controversial trading practice may be living on borrowed time (Photo: Shutterstock ) Welcome to the world’s most intense electronic battle. It’s waged on world stock markets and the ammunition is tiny fractions of pennies, fired through super-charged computers. The object is to wipe out the opposition. The theatre of war is a long way from the raucous bear pit of baying stock traders. Instead, capital is unleashed in a cavernous space, lined with banks of computer servers and chilled by air conditioning.
(le HFT — High Frequency Trading — est très certainement l’une des causes importantes des casse-gueules à répétitions des « marchés », mais qu’est-ce qui fait tourner ce HFT ? Petit essai de vulgarisation du concept sous-jacent de la boucle de rétroaction Skynet (joli surnom emprunté au film « Terminator » où l’intelligence artificielle mondiale créée par une entreprise éponyme (Skynet) déclenche la perte de l’humanité en retournant les robots contre les êtres humains…) de la finance… « L’I.A de la finance internationale, Skynet, vient de couler l’économie de ton pays et t’emm…toi et tes 60 millions de compatriotes…bip… » C’est à peu près le message que l’on pourrait recevoir des ordinateurs impliqués dans Le High Frequency Trading, largement en cause dans la crise financière actuelle, comme un article récent sur Reflets l’a très bien expliqué. Mais comment ça marche ce truc ?
Interview - Farzine Fazel : « Les principaux acteurs du Trading Haute Fréquence sont des boutiques spécialisées ou des Hedge Funds »Nous faisons le point sur le Trading Haute Fréquence avec Farzine Fazel et Mohamed Radjabou, respectivement Senior Partner et consultant chez Capco qui suggèrent d’encadrer cette activité qui recèle un potentiel de déstabilisation des marchés dans leur ensemble... Next-Finance : Plusieurs grandes banques affirment ne pas prendre part à ce type d’activités. Quels sont les principaux acteurs du Trading Haute Fréquence ? Farzine Fazel et Mohamed Radjabou : Effectivement on ne trouve pas forcément d’acteurs connus du grand public dans le Trading Haute Fréquence.
Everyone knows that high-frequency traders are the evil geniuses of the foreign-exchange market, right? They damage liquidity, swoop aggressively on tiny price errors, curdle milk with their oh-so-fancy computers and generally make the market harder for everyone to navigate. That’s what their detractors say. But the Bank for International Settlements , no less, doesn’t seem to agree. A new study by the BIS, based on research from officials at some 14 central banks, says that high-frequency traders (or HFTs in market speak) smooth out currency movements, help spread liquidity around this fragmented market and help to make trading cheaper for everyone.
The crusade against High Frequency Trading which Zero Hedge started well over two years ago , is now coming to an end. Reuters reports that U.S. securities regulators have " taken the unprecedented step of asking high-frequency trading firms to hand over the details of their trading strategies, and in some cases, their secret computer codes. " As everyone knows, the only thing of value within the sub-penny scalping HFT universe are the odd nuances in computer code. Which is why its supreme and undisputed secrecy is sacrosanct.
Skynet begins to learn, at a geometric rate. It becomes self-aware at 2:14 a.m. eastern time, August 29. In a panic, they try to pull the plug. -- Terminator 2 There is a general view that one way or another the end result of all the high frequency and algorithmic trading will be a blowup. But I don’t think the risk is as big as many are making it out to be. First, let me point out the difference between high frequency trading and algorithmic trading.
"It's Not A Market, It's An HFT 'Crop Circle' Crime Scene" - Further Evidence Of Quote Stuffing Manipulation By HFTRecently we posted a required reading analysis by Nanex in which the market trading analytics firm presented irrefutable evidence of quote stuffing by HFT algorithms in tens of stocks, in which thousands of cancelled quotes would reappear each second with a definitive periodicity and regularity, around the time of the May 6 flash crash. Aside from the fact that it is illegal to indicate a quote without a trade intent, this form of quote stuffing is in fact manipulative when conducted by HFT repeaters in specific "shapes" as it actually moves the NBBO actively higher or lower, in cases pushing the bid/offer range up to 10% higher without even one trade ever having occurred , simply by masking a big block order which other algos interpret as bid interest and pull all offers progressively or step function higher (or vice versa, although we have rarely if ever seen the walking down of a stock over the past 18 months).
25 September 2011 Last updated at 19:22 ET By Richard Anderson Business reporter, BBC News Mathematicians and their trading programs are increasingly taking the place of professional investors in financial centres across the world Trading floors were once the preserve of adrenalin-fuelled dealers aggressively executing the orders of brokers who relied on research, experience and gut instinct to decide where best to invest. Long ago computers made dealers redundant, yet brokers and their ilk have remained the masters of the investment universe, free to buy and sell wherever they see fit .
September 13, 2011 It’s not every day I come across a widely-shared article whose first sentence is factually incorrect, but a 9/9/11 story in Computerworld UK, “Algorithmic stock trading rapidly replacing humans, warns government paper” , is just such a creature. The first sentence begins,