Questions about HFT?

Discussion in 'Educational Resources' started by mcgene4xpro, Mar 15, 2011.

  1. Hi all,

    I have some questions regarding HFT. I am still newbie but i would like to understand certain aspects of the HFT world.

    I know those HFTer are playing the millisecond or even trying/acheiving the microseconds with thousands of trades per second. Here is the first question; regarding their tick price quotes, are they have different decimal so they can detect/trade during these infinite short time periods. I mean, in forex for example we have brokers with 4 decimal and others with 5 decimal. The 5 decimal 0.00000 could quote up to 0.00001 price change. I am wondering if those HFTer using higher decimal quotes.

    I know their infrastructure is highly different than retail ones. Hardware + Brokerage + clearing + Market access + Software all are different.

    If they are playing the microsecond and their tick quotes during the millisecond so what is the advantage? I am seeing it now as they are trying to watch the price moving slow motion? is this correct.?

    Thanks in advance for sharing info

  2. Second question regarding how they avoid the spread.

    "the way I see it, if I limit myself to the tiny holding periods which have to be the domain of every HFT to make so many transactions a day - I would still not be able to produce a profit, because in all but a negligible number of times, during each of the times I hold a position, the market movement will be lower than the bid-ask spread. So again I ask - how can they make money from such positions?"

  3. Bob111