An Edge In The Markets - Page 12
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Thread: An Edge In The Markets

  1. #111
    Quote Originally Posted by ;
    Yes, but that's mainly for executing manually determined orders, therefore not much of human decision making being eliminated there...

    Along with the fx market is quite different...
    So I went and read a bit about algorithmic trading on Wikipedia. I can't say much regarding the sources and the quality of the information because quite frankly I was too lazy to browse all the citations. But what I read seems to back up what's contacts in London are saying.

    Quote Originally Posted by ;
    Algorithmic Trading is commonly used by pension funds, mutual funds, and other buy side (investor pushed ) institutional traders, to divide large trades into many smaller transactions in order to handle market effect, and risk.

    Sell side traders, such as market makers and some hedge funds, provide liquidity into the market, generating and implementing orders automatically.

    A unique class of algorithmic trading is high-frequency trading (HFT), where computers create elaborate decisions to commence orders based on information that's obtained electronically, before human traders are capable of processing the information which they observe.
    The key here appears to be to not confuse algorithmic trading, which is used for better execution, with high frequency trading, which is largely computers acting by themselves. Furthermore, the profitability of HFT is believed to change dramatically from program to program and even then there are the issues of'system death'. The algo topic is largely beyond the scope of this thread so that I would direct anyone interested in it to use Google and watch that the http://en.wikipedia.org/wiki/Algorithmic_Trading.

  2. #112
    Quote Originally Posted by ;
    The key here appears to be not to confuse algorithmic trading, which can be used for better implementation, with high frequency trading, which can be largely computers acting by themselves. Furthermore, the profitability of HFT is said to change dramatically from program to program and then you will find the problems of'system death'. The algo subject is largely outside the scope of this thread so I would direct anyone interested in it to use Google and watch the http://en.wikipedia.org/wiki/Algorithmic_Trading.
    You should also not confuse all of trading in which computers act by themselves with HFT. There are a lot of 100% automated trading systems that are not HFT, which act on timespans of days or months - such as automatically reading and translating required financial records submitted to SEC.

    I will end my part with a quote from the founder of Oanda:


  3. #113
    Quote Originally Posted by ;
    You should also not confuse all trading in which computers behave on their own with HFT. There are a lot of 100% automated trading systems which are not HFT, which behave on timespans of months or days - such as automatically reading and translating required financial records submitted to SEC.
    I have made no such claims.

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