Algorithmic and High frequency trading

[Amit Gupta]

Hi everyone,

I have great interest in algorithmic and high frequency trading and have been recently reading a lot of articles about these fields.
I have one doubt
I feel that profits in hft are very dependent on the way institutional investors behave in the makets.
What proportion of high frequency trading profits are due to the predictability of large trades by institutional investors??

 

[Amit Gupta]

Ken Abbott Andy Nguyen

 

[Ken Abbott]

Ken Abbott Andy Nguyen

?

 

[Amit Gupta]

Ken Abbott Sir can you please clear my doubt which I have asked in my first post...

 

[Mr Doe]

Institutional investors have packed their bags and left for dark pools long time ago. Unless one runs a DP or can have a peek in it, it is very unlikely you can "front-run"(-very loose description) institutional trades. Internalizing retail orders was quite an profitable business while ago (and quite monopolized if I my add), but unfortunately, bad economy and lousy income prospects have forced retail investors to leave the game as well. Don't forget that regulation (indirectly) killed leverage for HF guys.
Though, it seems you are concerned only with equity. FX is still big, and I see plenty of progress in that direction. Moving swaps to a central clearing should give another angle for HFT play. Anyhow, HFT is here and it won't go away any time soon. Sure, regulators may change the landscape dramatically, but traders will adapt or new guys will emerge.

 

[Ken Abbott]

Ken Abbott Sir can you please clear my doubt which I have asked in my first post...

We are no longer engaged in prop trading, as per Dodd-Frank. The extent to which HF trading firms see BB firms as predictable I can't address.

 

[Anupriya]

Hi Amit

See if this paper is useful to answer your question:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1001313

Regards,
Anupriya
(www.quantinsti.com)