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High Frequency Trading

High Frequency Trading. Here to stay?. Introduction: What is ‘trading’?. -Markets : NYSE, NASDAQ -Companies sell their equity/debt to investors on markets (“ check markets”: http://finance.yahoo.com / ). What is High Frequency Trading (HFT) ? . Types of HFT:.

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High Frequency Trading

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  1. High Frequency Trading Here to stay?

  2. Introduction:What is ‘trading’? -Markets: NYSE, NASDAQ -Companies sell their equity/debt to investors on markets (“check markets”: http://finance.yahoo.com/)

  3. What is High Frequency Trading (HFT)? • Types of HFT:

  4. Relevance:Why should you care? If HTF is beneficial for economic growth and financial success, we should support it If HTF is detrimental to economic growth and financial success, we should reject it

  5. Advantages • 1. Robustness-easily implemented on large scale: over 5 yrs, traders using HFT has doubled • 2. Efficiency-speed and reduced overhead: “human hand... outclassed… by machines operating in milliseconds) • 3. Profits-maximized: ($2.7 bil profits in 2007)

  6. DisadvantagesTriangle of risk

  7. DisadvantagesIllegal Activity -High velocity of HTF enables elusive crime

  8. Conclusion:Here to stay

  9. Questions?

  10. References • "Findings Regarding The Market Events of May 6, 2010." SEC. SEC, 30 Sept. 2010. Web. 9 Oct. 2013. <http://www.sec.gov/news/studies/2010/marketevents-report.pdf>. • Finger, Richard. "High Frequency Trading: Is It A Dark Force Against Ordinary Human Traders And Investors?" Forbes. Forbes Magazine, 30 Sept. 2013. Web. 9 Oct. 2013. • <http://www.forbes.com/sites/richardfinger/2013/09/30/high-frequency-trading-is-it-a-dark-force-against-ordinary-human-traders-and-investors/>. • "How Dangerous Is Algorithmic Trading?" TechRadar. N.p., 8 Oct. 2011. Web. 9 Oct. 2013. <http://www.techradar.com/us/news/world-of-tech/are-pcs-to-blame-for-the-financial-mess-we-re-in-1031898/2>. • Philips, Matthew. "Knight Shows How to Lose $440 Million in 30 Minutes." Bloomberg. N.p., 2 Aug. 2012. Web. 11 Nov. 2013. <Knight Shows How to Lose $440 Million in 30 Minutes>. • Philo, Eric S. "High-Frequency Trading Profits Crushed ... but Danger Remains Unchecked." 247wallst.com. 24/7 Wall St, 24 Mar. 2013. Web. 12 Nov. 2013. <http://247wallst.com/investing/2013/03/24/high-frequency-trading-profits-crushedbut-danger-remains-unchecked/>. • Rogow, Geoffrey. "Rise of the (Market) Machines." Wall Street Journal (WSJ). N.p., 19 June 2009. Web. 9 Oct. 2013. <http://blogs.wsj.com/marketbeat/2009/06/19/rise-of-the-market-machines/>. • Rowley, Brandon. "The World of High Frequency Trading." T3 Live, 2011. Web. 12 Nov. 2013. <http://historysquared.com/wp-content/uploads/2011/02/clip_image0012.png>.

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