Question for High Frequency Traders

D

dima777

Hi!
I have a system which generates 240 trades per day - it is able to capture some profit but when I start to factor in the spread per each trade that starts to cut into profits rather fast. I was wondering how do the high frequency guys trade on Forex - if they trade a lot and very often they must have very low spreads - and I guess this is only viable if you have a relationship with a prime broker....but still I have seen average spreads of 0.5 per pair at some prime brokers - with the average of 600 pips per day 240 trades at 0,5 pips per trade this can subtract of 120 pips of profit (or 20%!!!). I wonder if there are prime brokers that can guarantee average spread below 0.5 pip per trade? Ideally on average 0,1 pip per trade (system usually enters at slow times) or fixed zero spread -only commission?
Thank you!

PS: I need to add that the system only trades top 28 pairs:
EURUSD
GBPUSD
USDCHF
USDJPY
USDCAD
AUDUSD
NZDUSD
EURGBP
EURCHF
EURJPY
EURCAD
EURAUD
EURNZD
GBPCHF
GBPJPY
GBPCAD
GBPAUD
GBPNZD
CHFJPY
CADCHF
CADJPY
AUDCHF
AUDJPY
AUDCAD
AUDNZD
NZDCHF
NZDJPY
NZDCAD
 
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dima777 said:
f they trade a lot and very often they must have very low spreads
More...
I don't know for sure, but my impression is that HFTs in the FX space are mostly liquidity providers - meaning they are making money by taking the other side of retail order flow. Not unlike the HFTs that get the Equities retail order flow, they don't really need to go outside of their systems very often. So they don't pay spreads, they get paid by spreads.
I doubt there are any HFTs which doing the strategies like you are describing that have to get fills somewhere else.
 
qlai said:
I don't know for sure, but my impression is that HFTs in the FX space are mostly liquidity providers - meaning they are making money by taking the other side of retail order flow. Not unlike the HFTs that get the Equities retail order flow, they don't really need to go outside of their systems very often. So they don't pay spreads, they get paid by spreads.
I doubt there are any HFTs which doing the strategies like you are describing that have to get fills somewhere else.
More...

You mean there are no high frequency traders on FX apart from liquidity proividers? Ok - is there still a way to limit the spreads to dsay 0.1 pip on average? There are zero spread accounts - they just charge commmisions - that can work? is there a thinkg like zero spread at all?
 
I doubt HFT like to trade spot currencies.
There are so many other better things to trade.

Personally I think LFT will probably trade spot currencies.
 
Banks have mixed views about HFT. Having traditionally profited from the spreads they
charge for taking risks, FX dealing banks unsurprisingly do not welcome the compression of
spreads associated with the rise of HFT (see Section 2), which they see as not fully reflecting
the true risk of trading. The high speed and very short holding period of HFT strategies have
also drawn criticism, as banks find their own order handling impaired by HFT firms because
these firms can detect the order in the early st
ages of its execution.

THERE A IS A TON OF HFT GOING AT FX:
https://www.bis.org/publ/mktc05.pdf


Can someone with institutional experince comment on the possibility of limitign spreads to 0.1 pip?
 
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