Tuesday, June 14, 2011

Your Competition

Trading Stocks in one-billionth of a second.

The pace at which the market trades stocks, bonds, currencies, and futures seems to have once again become faster than one could have ever imagined. Forget a few hundred automated trades a second impacting the markets. Think larger, or faster… If all claims are true, trading in the sub-nanosecond barrier is reality.

High Frequency Trading, what is called HFT on Wall Street, is a mystery to most investors. Its aim is to make money from market inefficiencies via computerized trading programs and hardware that analyze data and which make automated trading decisions that can last for fractions of a second or which can last for a fraction of day. Any market from currencies, to stocks, top futures and options, and other financial instruments can have heavy amounts of HFT influence.

HFT has been a target of Main Street and Washington D.C. for an obvious reason. HFT for the most part excludes Joe Public, leaving the typical investor at yet one more huge disadvantage against the big market participation from hedge funds, to investment managers, to trading firms and investment banks. Some successful independent active traders even employ many tools and tricks of HFT in hardware, trading programs, or in system hosting and co-location. If the claims are real and if the demonstrations live up to expectations, those who can afford it will be able to trade stocks, currencies and other electronic market securities in less than one-billionth of a second.

Yes, under 1/1,000,000,000… This is under the nanosecond barrier and that is what has been claimed by an outfit called Fixnetix.