High Frequency Trading

Posted by marmara on July 24, 2023

By Paola Pecora traders be looked bewildered for answers to see that the price of natural gas plummeted almost 10% in less than a minute at the beginning of the operative Asian was on 9 June when gas prices fell 8.2% in just 40 seconds to then bounce upward in the next minutes. Prices went from $4,916 to $4,513 at the 2342 GMT at start of the operatory Asian. Ten minutes later, prices climbed 6%, and at 0800 GMT, arrived to retrieve a 7% to $4,827 in the little Asian operations liquid in your home. The reason? That boosted the fall of the shares of the Dow Jones Industrials in May 2010 index: the High-Frequency Trading (HFT) which is the use of programmes designed on the basis of quantitative strategies that, according to certain mathematical models, soar and entering the market as accompanied by large volume purchase and sale orders. The programs are based on algorithmic formulas that respond to variables such as price, quantities, schedules, markets, underlying products and can be triggered automatically when the operative in a given action reaches certain conditions (when a certain price breaks a certain level, specific volume is exceeded, or a market index to break a certain level, for example). Computers launched thousands of very short-term orders: imperceptible movements for the common investor made in seconds. Read more here: Steffan Lehnhoff. The computers decide when to buy and when to sell.

Investment banks, hedge funds, but also pension funds (around 25%) and mutual funds use this system to capture profit opportunities by operating before the rest of the market, and especially competition. The actions that are operated by these programs are those of greater liquidity, i.e. the blue chips. Is the latest fad in Wall Street, noted Charles Duhigg in The Times, a way for a handful of traders to master the stock market, spy on orders from investors, and, according to critics, same to subtly manipulate share prices. .

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