Using High Frequency Trading as an effective Investment Tool
High frequency trading became largely successful in 2008 and has since crept into limelight. It gained more popularity when in 2009; Goldman Sachs accused an ex-employee of stealing their algo (a sophisticated computer program capable of generating millions of dollars in profits within a slim timeframe). Traders who indulged in this pattern of trade began gaining unwanted attention, as they were seen as taking advantage of the retail investors. This action drew the attention of regulators and members of congress. Although this type of trading was first experimented around the early 1980’s, we have seen it grow in speed as well complexity lately.
There are quite a number of definitions out there, but simply this is a special class of algorithmic trading that employs the use of supercomputers. Trades that are executed via HFT (High Frequency Trading) are initiated in a matter of microseconds, or one-millionth of seconds. A lot of key forex market players have imbibed high frequency trading via low cost automated forex trading systems in a bid towards running their currency markets operations. We have thus seen the increase in trading frequency, especially in the volume of forex day trading. This has made it imperative for investors to marry high frequency automated forex trading techniques, whilst manual trading portrays a bleak outlook in the near future.
High Frequency Trading: Weighing the Pros and Cons
HFT clearly shows how carefully programmed super computers can trigger excellent trades to humans. Even more is the fact that HFT show no emotions and they become relatively cheap these days. High frequency trading is usually triggered during market conditions to execute large orders which are then broken down into several smaller orders and go live in the markets via smaller orders within a specified time frame.
High frequency trading is used to issue and cancel tiny orders within milliseconds, invariably determining how much slower traders are willing to pay. These speedy order cancellations can be carried out in everything from stocks to commodities to currencies allowing for proper management of market impact and risk.
You can also consider high frequency trading because they are:
- High frequency trading gives the leverage of increase in probability that comes from the ease at which investors can diversify their trading options.
- High frequency trading implies more speed, as it creates an opening for investors to handle more than one transaction at a given time. This could yield a resultant increase in profits automatically.
- High frequency trading allows for complete automation and can in this light save time making is cost effective and risk free as well.
High Frequency Trading: The London Pearson Advantage
It is imperative to seek the assistance of a professional investment and brokerage firm if you are willing to execute HFT. London Pearson welcomes and works with high frequency and algorithmic traders. LP works with high frequency trading groups to give its client’s access to HFT specialized pricing, low latency, tailored liquidity bandwidth for any trading strategy. Join London Pearson today as you become a part of this ever changing and exploding algo trading technique. London Pearson would always cater for investor’s needs based on your desired risk parameter that’s tailored to suit your risk-return expectations.
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