How much does a HFT trader typically make?

[WinstonTJ]

Quote from syswizard:

“Delta One desks are not necessarily known as risky areas,” said Terry Smith, CEO of the interdealer broker Tullett Prebon Plc and of the asset management firm Fundsmith LLP. “But they are known as complex areas.”

Well, that just says it all.....and indicates these trades were NOT HEDGED as they were supposed to be. Poor internal controls, and likely poor software support (outsourcing strikes again !).

You guys have no idea and are speculating and making stuff up just for the sake of posting. Besides it was one rogue trader not the whole industry. The desk that had issues (from the link you posted) wasn't even a HFT desk.

 

[traderslair]

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 ?

Again you guys are full of shit. There are rebates in the emini markets but they are limited to a certain amount, not unlimited like on the equity markets.

 

[savagemp5]

Do you guys even picked up books to read ? Or actually have the priviledge to walk into an actual Hedge Fund Desk, or a HFT desk ?

HFT basically means high frequency, many many trades a day. It can employ tons of strategies, things familiar to you may be exchange rebates, front running, events, arbs, VWAP TWAP, Getting run over by trains services. etc etc ...

As to how much a HFT guy makes, it all depends on his strategies profits, his expenses, and all that research and ongoing competition.

 

[TraDaToR]

Quote from traderslair:

Again you guys are full of shit. There are rebates in the emini markets but they are limited to a certain amount, not unlimited like on the equity markets.

???...Are you referring to exchange fee discounts( from already preferential member rates ) at the end of the month when one CME member does important volume? You still have exchange fees to pay, CME never pays you to provide liquidity AFAIK.

 

[shotse]

Quote from lwlee:

Cmon, give the guy a break. He read this, now's it just a matter of time before the cash rolls in.

i just lol'd

 

[RewriteQuran]

https://secure.wikimedia.org/wikipedia/en/wiki/High-frequency_trading FTW

 

[Occam]

Quote from Lights:

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.

Interesting post -- thanks, Lights. I'd be surprised if there aren't still some winners, but overall it must be getting more competitive, with spreads shrinking continually and algorithms getting ever more refined. My guess is that the arms race for lower latency is probably way overdone, in the context of the shrinking pie.

 

[traderslair]

Quote from TraDaToR:

???...Are you referring to exchange fee discounts( from already preferential member rates ) at the end of the month when one CME member does important volume? You still have exchange fees to pay, CME never pays you to provide liquidity AFAIK.

CME pays for providing liquidity but it's limited to a certain amount.

Like I said, all you guys are full of shit.

 

[TraDaToR]

Amount per what? transaction? lot? end of month rebates? salary? under which program? membership?Who do you know gets paid for providing liquidity?

 

[WinstonTJ]

Quote from Occam:

Interesting post -- thanks, Lights. I'd be surprised if there aren't still some winners, but overall it must be getting more competitive, with spreads shrinking continually and algorithms getting ever more refined. My guess is that the arms race for lower latency is probably way overdone, in the context of the shrinking pie.

There was a time when there were huge differences in latency - where even fairly big companies were still using 10/100 networks and gig switches and circuits were extremely expensive.

Today with advances in virtualization technology 10-gig Ethernet is becoming the standard and 10Gig NICs are pretty cheap - for $500 you can get a dual-port Intel 10G NIC (ebay).

Because 1000mbps is now the standard and shops like Verizon have pumped FiOS everywhere we have a pretty decent infrastructure backbone and this has eliminated much of the latency arb that used to exist. That said, there is still a massive difference between colo and non-colo. What was a second is now a millisecond.