https://www.bloomberg.com/news/arti...ld-s-fastest-traders-why-aren-t-they-thriving
Bloomberg's take on the state of HFT.
Bloomberg's take on the state of HFT.
They’re The World’s Fastest Traders. Why Aren’t They Thriving?
- Thread starter ajacobson
- Start date
The HFTs are struggling to make big profits.
The Long term trend following Hedge funds have been struggling over the last decade.
The prop firms and prop traders have been struggling over the last decade as well
I been doing well on the back of the interest rate and Trump volatility since last year. However it that goes away then my results will go back to being mediocre as well.
The Long term trend following Hedge funds have been struggling over the last decade.
The prop firms and prop traders have been struggling over the last decade as well
I been doing well on the back of the interest rate and Trump volatility since last year. However it that goes away then my results will go back to being mediocre as well.
The article comparing income generated by market makers in 2009 vs now as a sign of "bad/lean times" is silly. 2008/2009 was a Black Swan event taking place which is not the market norm. Any company that depends of Black Swan events to thrive is a company destined to fail.
The real issue is the nature of the market being an open system. Brute force speed trading HFTs have crowded the market reducing the edge of all HFTs. The wall that is being hit is an upper limit on speed edge.
The battle will be won by the HFT companies that can run with the lowest costs as top speed is matched by the competition and nullified as a result.
On the other hand, those who rely on skill/TA rather than brute strength should be faring much better in low volatility markets.
there is an old saying every man should have three girl friends, the current one, the one on the way out and the one on the way in. the same goes for your trading edges.
There's only so much room to front-run the market. Also the market is very efficient on the time frame they trade now.
I have never understood this "efficient" phrase. To me it means that the price is exactly what the price should, or that is get there very quickly, right right after a news release,etc. But since it takes many minutes to hours for a trend to get going, where is the efficiency? If it was truly efficient, then nobody should be selling on the way up, but clearly there is just as much selling or else the buyers couldn't get what they want.
The fact that a market trends, as opposed to constantly gaps means that it isn't efficient. If it was efficient, it would just jump right to a new level, until the next piece of news came in which causes it to jump to another level. All the movement in between shouldn't happen in my opinion.
I don't know if the first movers have it on lock down. It's an arms race and some of the traditional HFTs are having a tough go of it while others are surely thriving. The IP at some point becomes common and those jumping ship or starting new firms could have the benefit of building things from scratch.
At what point does a bright young team say "hmm, I can replicate this with three to four of my buddies and be a partner in the profits". The big firms need to make hundreds of millions to stay afloat. A small team making say $5 million after costs could be doing better than if they were at a large shop writing the code. Of course the flip side is the speed of data and with firms like Jump buying the real estate around exchanges it does tip things in their favor: https://www.bloomberg.com/news/arti...s-outside-cme-reveal-traders-furious-land-war
If I were the exchange, the way to level the playing field would be to put a microwave on their roof and let everyone have the same entry point. Alternatively, put in random 1-100 nanosecond delays into the incoming orders. Why? if most participants don't see a level playing field they trade elsewhere. Will exchanges do this? not in the short run as they are greedy. Long run, I think they will have to if/when their growth slows.