How much does a HFT trader typically make?

Quote from turkeyneck:

A former colleague of mine moved from IT to trading. He traded for an IB before setting up his own shop with a couple of guys. Now he does HFT from his home. He seems to be doing very well financially. Any idea?
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Hi Turkeyneck,

HFT trading is not an edge. It is a kind of strategy that you might lose or win. To clearly explain it, let's put it this way. HFT traders are like very professional basketball players. Not all professional basketball teams win. A professional basketbal tea,m competes with other professional teams. He is not competeing with a fat daddy who plays basketball in front of his garage door. You don;t need to be a professional HFT trader to win. HFTs are no risk to the market. They are just another branch of traing. We have long term investors, swing traders, day traders and HFTs. Actually we have many other categories in between. Maybe your friend has 5 min trading time slot.

Another way of looking at HFT is like wholeseller and retailers. Both make money. Wholeseller makes little in thousand quantities and retailer makes more money in less quantities. Both make money. It is a matter of choice and requirements.
 
First of all, remember HFT trading is different than ALGORITHMIC trading.
The differences are subtle, to say the least !
It's all about "average time in trade".
It's incredible to me that no one is focused on this metric....yet it is critical towards distinguishing the two.
 
Quote from syswizard:

First of all, remember HFT trading is different than ALGORITHMIC trading.
The differences are subtle, to say the least !
It's all about "average time in trade".
It's incredible to me that no one is focused on this metric....yet it is critical towards distinguishing the two.
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Not to go off on too much of a tangent but Algorithmic trading is a pretty broad term. HFT is algo trading but algo trading may not be HFT. There are no clear definitions and generally people discuss algorithmic trading in terms of daily share volume and latency.

Regardless - the margins are pretty thin in the HFT space. Stuff gets arb'd out quick and you have to constantly fight for your edge.

The one analogy of professional sports teams was very good - you are competing against many others trying to do the same exact thing.
 
Quote from traderslair:

You guys are all full of shit.

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Care to be more explicit and lucid ?

Here's some help:
1. easily understood; completely intelligible or comprehensible: a lucid explanation.
2. characterized by clear perception or understanding; rational or sane: a lucid moment in his madness.
 
Quote from traderslair:

You guys are all full of shit.

HFT guys make money on the exchange rebates.
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He said all that needs to be said. True HFT guys make money on the rebates. Anything else is just automated/algorithmic trading.
 
Quote from Mr_You:

He said all that needs to be said. True HFT guys make money on the rebates. Anything else is just automated/algorithmic trading.
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Thank you - Mr You (no pun intended !)
So, it appears as if you have now defined the difference between HFT and auto/algo trading. However, HFT exists in the emini markets where there are no rebates.
Care to explain that ?
 
I know for a fact that HFT's are making lot less than they were 5 years ago. The pie is getting smaller and smaller as similar strategies deploy against each other. The smart money have already left HFT equities and now involved in other venues.



Quote from syswizard:

Thank you - Mr You (no pun intended !)
So, it appears as if you have now defined the difference between HFT and auto/algo trading. However, HFT exists in the emini markets where there are no rebates.
Care to explain that ?
More...
 
Quote from syswizard:

Thank you - Mr You (no pun intended !)
So, it appears as if you have now defined the difference between HFT and auto/algo trading. However, HFT exists in the emini markets where there are no rebates.
Care to explain that ?
More...

The reality is they don't know what HFT is or even what rebate trading is.

What about delta one, arb or event desks? Is that not HFT?
 
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