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High-Speed Trading: Profit—and Danger—in Milliseconds
Started:May 15th, 2012 (04:40 PM) by Quick Summary Views / Replies:575 / 1
Last Reply:May 16th, 2012 (03:57 PM) Attachments:0

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High-Speed Trading: Profit—and Danger—in Milliseconds

Old May 15th, 2012, 04:40 PM   #1 (permalink)
Quick Summary
High-Speed Trading: Profit—and Danger—in Milliseconds

A new breed of trader—armed with hundreds of millions of dollars —is trading so fast that he can dry up liquidity in an instant, causing severe price swings.

More on CNBC...

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Old May 16th, 2012, 03:57 PM   #2 (permalink)
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cordoba spain
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Posts: 72 since Feb 2011
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The article concentrates mainly on the effect "pre news", surely trading in milliseconds can happen any time during the trading session. Just look at some of the illogical reactions to minor news anouncements.

There was an article recently that stated something like "80% of all trades during a day in the NYSE, last no longer than 2 seconds" did they mean "milliseconds".

I often would like to get out of a trade milliseconds after I have entered!!!

How do they make money out of that sort of transaction. Place an order for 150,000,000 price moves 1 cent in a millisecond you have made 15,000. What is the R/R on that?

Just looked up the definition of Arbitrage in Investopedia.

"Definition of 'Arbitrage'
The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. Arbitrage exists as a result of market inefficiencies; it provides a mechanism to ensure prices do not deviate substantially from fair value for long periods of time.

Investopedia explains 'Arbitrage'
Given the advancement in technology it has become extremely difficult to profit from mispricing in the market. Many traders have computerized trading systems set to monitor fluctuations in similar financial instruments. Any inefficient pricing setups are usually acted upon quickly and the opportunity is often eliminated in a matter of seconds"

Last edited by dee50; May 17th, 2012 at 06:26 AM.
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