High Frequency Trading
Outrun the Competition and Quickly Adjust to New Market Conditions
Though controversy about high frequency trading (HFT) dominates the news, there is no argument that this subset of algorithmic trading has become a key component of the trading arsenal of many firms. Today’s markets present new opportunities more than ever before, making HFT a valuable weapon. In fact, estimates state that upwards of 70 percent of all equity-trading volume in the U.S. is done by high-frequency traders.
How High Frequency Trading is Related to Algorithmic Trading
A recent poll by Greenwich Associates found that 20 percent of institutional investors don't fully understand the practice of high frequency trading. Algorithmic trading is broader, encompassing the automation of alpha-seeking and execution trading decision making. High frequency trading specifically monitors the market for patterns that indicate alpha-making trading opportunities; then places orders to take instant advantage of those opportunities. As market data is coming in fast, and conditions are changing by the millisecond, the firms that leverage HFT are able to jump on opportunities faster than the competition that isn’t using HFT.
HFT’s impact on the market
High frequency trading has brought down the average trade size, and the sheer number of trades has gone up. In fact, stock exchanges report that just a handful of high-frequency traders now account for a more than half of all trades. HFT has therefore stirred up some controversy, from opponents who believe it gives traders an unfair advantage. In reality, HFT creates valuable liquidity, quickly matches buyers and sellers, and keeps prices in check – benefits all market participants enjoy. And, it’s not just the mega-firms that can leverage high frequency trading directly. Today, firms of all sizes trade using powerful technology; limited only by their ability to customize strategies to exploit the opportunities the market presents.
You can outrun the competition and quickly adjust to new market conditions with high frequency trading solutions from Progress Apama. Request a free demo to see Apama in action!
Profit-Loss, a leading FX publication, named 
Progress and Activ Financial have teamed up to offer a new market data adapter for Apama Capital Markets Foundation.
