Virtu Celebrates Another Year Without a Single Day of Losses

[i am nobody]

Not sure if you're being sarcastic here. Profit per trade doesn't matter, in the end it's the dollar amount that counts. I'm 99.9% certain they don't use any MAs anywhere.
With only 140 employees, that's still a considerable amount of money.

Madoff had a lot of employees too. But it was an empty box. Sometimes expenses are necessary to fool people.
I was sarcastic about MA but I don't believe they have a sophisticated model. Their profit margin is so small that the smallest change can put them in heavy losses. Trading is buying and selling like any business. Profit margin is the most important ratio in business, not turn around. The final goal is to make as much money as possible. 36$ profit for a trade with a value of probably thousands of dollars per trade gives a profit microscopic small margin.

 

[newwurldmn]

5.3 million trades to make 190 million profit? That's less than 36$ per trade? That's almost nothing. This has nothing to do with trading. There are companies with more losing days but also with alot more profit.
If their so called algorithms cannot perform better it will probably be a simple MA they use.

5.3MM trades/day. 190MM net income and 750MMish in revenues. the 750MM is their trading pnl. They spent 550MM on technology, general and administration, and compensation.

 

[d08]

Madoff had a lot of employees too. But it was an empty box. Sometimes expenses are necessary to fool people.
I was sarcastic about MA but I don't believe they have a sophisticated model. Their profit margin is so small that the smallest change can put them in heavy losses. Trading is buying and selling like any business. Profit margin is the most important ratio in business, not turn around. The final goal is to make as much money as possible. 36$ profit for a trade with a value of probably thousands of dollars per trade gives a profit microscopic small margin.

HFT always has small margins but the law of large numbers means you also get a very smooth curve. They have a large number of strategies and therefore the smallest change might kill a strategy or two but won't kill their business model. Their profit margin is quite high as I seriously doubt they have much equity, it's not needed for HFT.

 

[VPhantom]

Their profit margin is quite high as I seriously doubt they have much equity, it's not needed for HFT.

I'm surprised by that bit. Don't they need massive amounts of capital to be able to trade into every opportunity they find? Stocks for example don't offer a lot of leverage.

 

[heypa]

Require them to pay retail commissions with retail available margin and ........

 

[d08]

I'm surprised by that bit. Don't they need massive amounts of capital to be able to trade into every opportunity they find? Stocks for example don't offer a lot of leverage.

Their holding time is very brief, freeing up the capital quickly. As opposed to longer term funds which are in several deals all at once.

 

[VPhantom]

Their holding time is very brief, freeing up the capital quickly. As opposed to longer term funds which are in several deals all at once.

Yes but we're talking about opportunities in presumably thousands of instruments in parallel, and I doubt this is always limited to small lots.

 

[newwurldmn]

I'm surprised by that bit. Don't they need massive amounts of capital to be able to trade into every opportunity they find? Stocks

Financials from 2013 state they had about 500MM in equity and a balance sheet of about 2.5Bn in assets. As a designated market maker and as a registered broker dealer they can get away with MUCH lower capital and margin requirements than retail traders or institutional customers .

 

[VPhantom]

As a designated market maker and as a registered broker dealer they can get away with MUCH lower capital and margin requirements than retail traders or institutional customers .

I hadn't thought of that part, thinking "portfolio margin" was as leveraged as it could get. Thank you for clarifying!

 

[Van_der_Voort_4]

5.3 million trades to make 190 million profit? That's less than 36$ per trade? That's almost nothing. This has nothing to do with trading. There are companies with more losing days but also with alot more profit.
If their so called algorithms cannot perform better it will probably be a simple MA they use.

they became serious player after hiring this guy,
https://www.linkedin.com/pub/rosen-kralev/9/7b7/b24
https://www.linkedin.com/pub/rosen-kralev/9/7b7/b24

Honors & Awards
Gold Medal
International Mathematical Olympiad, Tokyo 2003
July 2003
Gold Medal
International Mathematical Olympiad, Athens 2004
July 2004
Gold Medal and Perfect Score
International Mathematical Olympiad, Mexico 2005
July 2005
First Prize, Perfect Score and Special Award
Russian National Mathematical Olympiad 2004
March 2004
First Prize
Russian National Mathematical Olympiad 2005
March 2005
First Place
Bulgarian National Mathematical Olympiad 2004
May 2004
First Place
Bulgarian National Mathematical Olympiad 2005