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Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
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Doesn't answer your question in anyway (personally I agree with @Portland) but you may be interested in this. It's old but probably still very relevant and gives an insight into what a subset of HFT are doing. post237880 re: Program Trading
That is a fascinating read. Thank you for pointing it out. The original link to the confab is dead, so we have only FIO to have it to view. Thank you thank you for the pointer!
I have been managing a book of high frequency trading for 2 years on futures (bund, bobl, schatz), as well as on spot FX as liquidity provider. Whilst HFT on stocks is very different than on Futures, I have enough experience to answer your question with facts and not random thoughts.
1) the Futures market is very centralized, meaning that if you want to trade E-Mini S&P 500, there is only 1 place to trade it, as opposed to stocks and FX, where you can deal with multiple venues, dark pools, inter dealer brokers etc.
The main arbitrage HFT try to do is between different venues, so when looking at futures, you will not have "ultra high frequency" traders that try to arbitrage latency and need microwave tower platforms to be faster than cable-connected computers.
2) HFT is not bad for you. At least in the futures space. HFT in futures is essentially people who have a strategy that trades very low time frames(think about a moving average crossover on 1 tick data instead of 1 minute or 10 minute candlesticks) and have an average trade profit below 1 tick. Hence they cannot execute by using market orders and need to get filled using Limit orders.
So if anything, that gives you liquidity.
The myth that HFT makes money everyday is only true when dealing with latency arbitrage, HFT traders in Futures do not make money all the time, far from it. They make a bit more money than position traders and intraday traders but have very limtied capacity and usually can't manage more than 100m$, making it not very interesting for half the hedge fund industry.
Thank you for the very informative reply. (I don't know where the 'thank you button" here is). I guess I was looking for whether its possible by looking at the /ES chart to see if HFT is going on. I'd prefer not to trade the /ES at such times. Still a newbie. :-)
So i keep hearing traders complain about HFT, about how its changing everything. There's a ton of posts about it all over the web, Cramer even complains about it alot. I want to know how many people really believe that trading has become difficult …
