High-Frequency Trading

The point of high-frequency trading is to smooth markets over time.

Imagine that you know a big block order is coming in. Some huge pension fund needs to send 70,000 checks out next week so they’re selling some asset.

The asset’s price doesn’t really deserve to go down. The fund just wants to cash out. So you buy the huge block order and dole it out in smaller pieces as regular buy orders ebb in over the next few weeks.

You just smoothed the asset’s price, as well you should.

That’s not ultra-high-frequency trading — which is more about having the fastest technology — making it possible to liquidate a position RIGHT, RIGHT, RIGHT now.


About isomorphismes

Argonaut: someone engaged in a dangerous but potentially rewarding adventure.
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