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High Frequency Trading Essay

792 words - 4 pages

HISTORY
High frequency trading have a root in the 17th century , Rothschilds used pigeons to carry the oversea information of securities to achieve arbitrage faster than their competitor of stock price differences across national borders using carrier pigeons to relay information before their competitors . They also used the running man, the carriers horse riding and tiker tape machines for the information exchange . Now a day, The computer is very useful for human and they was used for the purpose of financial profit with speed and handling huge data. Therefore, High frequency trading help the investor to achieve this purpose.
High frequency trading has carrying on since 1999. In this ...view middle of the document...

The high frequency traders can place buy sell massively position to benefit from the price fluctuations in the trading day , they placed purchase orders in low price, then sell orders in a slightly higher price within a split second, or vice versa , sell orders at a higher price at first , then place orders to buy at a lower price within just a few seconds .
Flash order help high frequency traders place orders in less than one second because high speed in order to help the transaction takes only a few transaction fees, while enjoying big profit potential if they understand and take advantage of the asymmetry of the market within a split second return.
Percentage of equity trading volume from HFT

( Source : NTT communications )

In a relatively short period of HFT, it has been relatively widely performed in the United States and European countries and also gradually popular in Asia. Strong growth in the volume of trading HFT is due to its rapid for the huge number . In 2010, HFT was estimated to have accounted for 65% by volume of the all equity turnover in the U.S, up from 55% in 2007 this can be known as the high frequency trading computer algorithms had performed 55-65% of all stock trades and many other asset classes are dominated by high frequency trading .
European accepted HFT in its stock market in a long period of time but HFT is...

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