Alpha to Zeta – High Frequency Trading (HTF) Strategies

HTF Strategies:

  • The “Market Making” strategy that basically turns the bid-ask spreads into profits by generating daily buy and sell (limit) orders continuously and automatically.
  • The “Statistical Arbitrage” (favoured by Hedge Funds) whose aim is to take advantage of momentary pricing inefficiencies among various asset classes and securities.
  • The “Momentum Ignition” strategy (perhaps the trickiest one, and echoes the “spoofing” in the 2010 “Flash Crash”) which consists in executing and cancelling a large number of orders, aiming to ignite rapid market movements.
  • The “Liquidity Rebate Trading”: HFT firms started to gain popularity when exchanges began offering incentives for companies to add liquidity to the market. For instance, the Supplemental Liquidly Providers (SLPs) are a group of the New York Stock Exchange whose aim is to add competition and liquidity on the exchange. Said incentives consist of a fee or rebate paid by the NYSE to the firms for providing liquidity ($0.0015 per trade, as of 2009)

Do not hesitate to share your comments & thoughts (see comment section below).

Subscribe with your email address (see dedicated section on the right) to be automatically notified when a new article is published. Also, don’t forget to follow us (here and on our other social media pages, which include Facebook, Twitter & Instagram).  

Stay tuned dear Storm-Troopers !

(Yes, this is indeed the term we coined for our loyal readers… Oh and yes, we are Star Wars fans).

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s