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Markets with the Most Automated Trading!!!


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Markets with the Most Automated Trading!!!

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  #1 (permalink)
Hartford, CT. USA
 
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Hi All,

I was hoping to get some input from the other members here.

Which markets, in your opinion, contain the greatest amount of automated trading??

You know, The automated buy sell programs that the really big traders seem to use a lot.

Your input is appreciated.

Thanks,

RJay

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  #2 (permalink)
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I guess it depends on the degree of "automation". I think a lot of funds/institutions use algo's for order handling/accumulation strategies. I think there a lot of equities have that as a similarity.

High-Frequency Trading (HFT))

It says 73% of equity trading volume is HFT (automated). It would be interesting to see the effect of limiting "dark pool" trades and how that would effect position sizing/algo's.

As for individual markets.....I have no idea? Oil and ES would make sense as they are highly liquid.

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  #3 (permalink)
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Rjay, Yoda!

in a recent article explaining how the high frequency traders do what they do, and the firms that have plugged in their operations centers on the internet backbone and same node as the exchanges, by locating their office spaces in the same buildings that have these robust, very thick, high bandwidth nodes, they are able to get and see infinitely more data than just about any other market participant.

The options brothers that used to be pro-football players and are commentators on CNBC, did a presentation at the NY Traders Expo and verbally explained this buisness strategy with respect to seeing the huge volume of options executions data. He said when there was an unusually active day in a particular stock / option, and they measured the amount of line by line executions (ticks) that came through thier offices against another locations' data and were absolutely surprised to see that so much data was either skipped, aggregated (which was hard to belive there was some post processor) or simply not seen. We were talking on the scale of 4:1. Verbal stories lack substance and verifiable facts.

The WSJ had a recent article this summer on HFT shops and how they were able to make billions jumping in front of others and scalping huge quantities for pennies on the dollar, over and over.

When the article changed focus to how they describe what they do, then we got a better understanding. Simply put any exchange or market that is represented with an electronic interface, where no human hands intervene, they take and make a major presence there.

The answer to your question is just that.

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  #4 (permalink)
Austin, TX
 
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Noteworthy also is that there's a "degree" of automation involved.

On one end of the spectrum is fully automated or "hands free" where the algo enters, manages and exits the trade and the user need only operate in "cruise control" mode and observe and modify the algo as they see fit.

obviously on the other end is the 19th century paper style/OTC.

Most modern traders who do not have a man on the trading floor are obviously somewhere in between.

I would argue that if you use something as simple as an OrderCancelsOrder or a Supplemental Order or a trailing stop, you are using a degree of automation...the computer is calculating, tracking, moving, adjusting and thinking for you.

So the first part of declaring which markets have the most automated trading is to declare what exactly constitutes automated trading.

Some old school holdouts would argue that any trade executed from a computer is "automated."

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  #5 (permalink)
NYC
 
 
Posts: 187 since Dec 2010

ES....are you fucking kidding me? The question is orders of magnitude off even with free data.

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  #6 (permalink)
 
 
Posts: 1,081 since May 2010

Stock market.

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  #7 (permalink)
Legendary Market Wizard
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This article says oil is 45% auto-traded.

NYMEX oil trade 45 percent computer-driven | Reuters

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