High Frequency Trading Explained

What is high frequency trading?

High-frequency trading, also known as HFT, is a method of trading that uses powerful computer programs to transact a large number of orders in fractions of a second. ... Typically, the traders with the fastest execution speeds are more profitable than traders with slower execution speeds.

If you're an average human being, your eyes take around 400 milliseconds to blink once. High-frequency trading is a kind of market activity that moves in less than one millisecond to spot and take advantage of an opportunity to buy or sell. It happens through trading algorithms, programs that determine how to trade based on fast-moving market data.

The kind of profit opportunities that high-frequency trading looks for aren't the things most investors ever think about. They're not betting that technology companies will see their profits grow more quickly than expected, for example, or that a recession is coming.

Instead, they're looking for tiny opportunities for arbitrage. Imagine that, at precisely 10:30:01.01 AM, a share of Bank of America's stock was trading at $16.02 on the New York Stock Exchange - but it was $16.04 on a smaller exchange called BATS. A high-frequency trading computer might spring into action by buying up shares of stock on the New York Stock Exchange and selling them on BATS. To make money this way you need to move super-fast, because the opportunity could vanish at any moment.

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High Frequency Trading firms in India

Brief introduction I am a B Tech in Computer Science and Engineering from IIT Bombay. I wanted to explore and work in an HFT so I did my research about the HFT firms in India. I have hereby compiled a list of top HFT firms in India. I have also written a post that explains the pay structure and CTC of the HFTs in India . Top HFT Firms in India Tower Research (Gurgaon) Quadeye (Gurgaon) Graviton Research (Gurgaon) APT Portfolio (Delhi) Worldquant LLC (Mumbai) Mathysis (Gurgaon) Alphagrep (Gurgaon) Goldman Sachs (Bangalore/Mumbai) Two Roads Tech (Bangalore) Morgan Stanley (Mumbai) Dolat Group (Mumbai) Estee Advisors (Gurgaon) Edelweiss (Mumbai) Open Futures (Delhi) iRageCapital (Mumbai) Only the first 8 of the above list control the major market share. HFTs in India have not been for a long time but they are expanding fast which is giving new opportunities to build companies in this segment. There is little competition if we compare it to US , UK and other major exchanges around the wo

Pay Structure (CTC) in a High Frequency Trading Firm in India

This post will try to give an idea about the pay structure / package / CTC of an employee in a High Frequency Trading Firm (HFT) in India. The overall CTC of HFTs easily exceeds the CTC of software firms in india (Google India, Microsoft India, Adobe India etc) The major roles that these companies hire for and their corresponding pay structure is given below- Quant Trader / Quant Researcher / Strategist - This is the highest paying role in an HFT. Their role comprises of making strategies for the market and actually executing these in the market to make money. Their work is very hectic and their performance affects the company directlly and on a major scale. Their pay structure / CTC usually comprises of the following components - Base - This is the base pay for the role. This number divided by 12 months is what the trader actually gets each month as the base salary. This comprises of about 60-70 percent of the CTC for a fresher and around 10-20 percent of the CTC as the seniority

Why chose high frequency trading firm over software firms

This is one of the most common doubts people studying in the premier institutes have when the placement season approaches. Apart from the obvious difference in the work, there is a difference in their pay as well as a difference in the work timings and flexibility. About Me I have done my B Tech in Computer Science and Engineering from IIT Bombay. I too faced a similar dilemma and chose to finally go with doing a job in an HFT. Work culture The work in HFTs is hectic if we compare it to software companies but it’s interesting too. It’s a fast-paced industry and you are required to work quickly on things that the company wants to be done in order to reach its goals. You are required to give a lot of time to some ongoing problem that the team faces in trading which might be hampering live trading. And once the team finds a solution, it is brought into production rapidly. Comparing this with the work in a typical software firm, you are generally assigned some tasks with their correspo

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