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No matter what strategies you use while trading or investing, your orders, profits and ROI will be affected by HFT activity from time to time.
It should be your goal. Learn to trade before HFT Or to completely eliminate HFT activity.
HFTs are a group of professional-side market participants. High frequency trading companies came from the beginningSOES bandits”. 1980s and 90s. SOES gangs were the most skilled and highly skilled floor traders of the big banks of that era.
When “home computers” and kit computers came out in the 80’s, desktop computers decided to leave their high-stress jobs and work at home. They were smart traders and knew how to properly process the large orders that came through the exchange in those days.
Buy side institutions and sell side institutions were led by SOES gangs, these floor traders were now professional traders working on personal computers.
In the year In 2001, the sell-side institutes had enough of the front line and went to Congress to demand that the fractional pricing structure of US markets be changed to decimal. They came up with the story that “retail investors and retail traders don’t understand fractions, so it’s hard and unfair for retail groups to figure out fractional trading.” true story. And of course the Congress of that era believed this to be true because many retail day traders were losing their entire capital base and had huge margin calls.
The Sell Side, made up of big money center banks and giant financial services companies, paints a very compelling story: Congress passed legislation that converted the US stock market to a decimal pricing structure. The real reason the sell side wanted the price converted to decimal was to get SOES out of the bandits with a tight spread of a few coins and sometimes less.
The SOES bandits quickly realized that the old way of intraday-trading was obsolete. The coin expansion has not been able to generate significant revenue from the large lots leading up to it. Additionally, the new Dark Pool Options Trading System has become a central trading platform for large trading activity by buy-side institutions.
SOES bandits became high frequency trading companies. They hired the best programmers of that era and chose 6 different strategies to program their supercomputers and chose the market OPEN as the main maker/taker sequence.
High frequency traders offer their trading strategies to the public exchanges.
The exchanges have been struggling with liquidity issues for a reason. Dark pool to come.
The agreement between the NYSE and NASDAQ exchanges gave the newly named “HFTs” maker/taker status, a market entity that creates liquidity or removes liquidity on public exchanges. HFTs are paid by the exchange as a maker/taker. Today, a few large HFT firms are designated as market makers when HFTs want to short sell the market by buying from cover as the stock price falls due to a lack of buyers.
What you need to know as a trader or investor: HFTs trade in milliseconds and can fill the queue with thousands of small orders in 1 second. .
The chart below shows HFT gaps. To profit from such a move, you need to be in the stock before the gap.
Chart showing open HFT gaps:
HFT gaps are usually very large and always open in the market.
After more than 20 years, HFTs are the main part of the market. Exchanges need the liquidity they generate on public stock exchanges, as dark pools continue to attract large amounts of liquidity each day.
As an investor, there is nothing more shocking than seeing your best performing stocks suddenly open in the market due to HFT activity related to retail news such as earnings or other corporate news.
As a retail trader or semi-professional trader Business as business Under SEC and IRS regulations, HFTs can provide windfall profits if learned. Communication techniques Before most HFT slots.
The news is delayed on the retail side so professional traders and floor traders can react and buy or sell short stocks before HFTs fill the queue before the market opens. Just as retail brokers fill overnight retail orders or send market makers to fill under order fees, once HFTs open the stock, professionals are ready to take profits immediately. Flow agreements.
Learning how to identify technical setups that trigger automated HFT systems is critical to avoiding large unexpected losses or trend reversals. Visit my website to learn more.
Martha Stokes, CMT
TechniTrader has been teaching traders and investors a complete process for trading or investing in the stock market and other financial markets since 1998. We have helped over 500,000 traders and investors achieve their financial goals. Our courses provide a complete, comprehensive training program to investigate properties or trades using a three-step approach.
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See source on newsdirect.com: https://newsdirect.com/news/high-frequency-trading-firms-avoid-or-trade-ahead-of-them-767836539