You'd Better Know Your High-Frequency Trading (HFT) Terminology

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Old Jul 14, 2017, 2:00pm   #1
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You'd Better Know Your High-Frequency Trading (HFT) Terminology

We've just published a new T2W article called "You'd Better Know Your High-Frequency Trading (HFT) Terminology" by Elvis Picardo.

Quick Summary: Elvis Picardo explains the key terms associated with High Frequency Trading (HFT) including what and how they impact trading activity.

PS. Don't forget to rate the article after you've read it and share your comments on this thread.
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Old Aug 19, 2017, 4:54pm   #2
 
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Very helpful

As a software engineer myself, I find the carefully worded explanations of HFT terms and tactics very enlightening. I have not read the Lewis book, so I come fresh to this article. It is possible, however, that the meaning of the terms and tactics might still escape many readers. I wrote software programs to test the speed and processing accuracy of very large database software. This software is called a Data Warehouse, employed in all large banks, retailers, and manufacturers [and exchanges] to manage and make available all the important data of their businesses. Customers' first priority of these computer/software systems is always speed+accuracy. Software programs written to test "data processing"--the processing of data speeding across the CPU or the little bitty memory chip or the buses [electronic connection lanes between parts on the motherboard] must capture and report on the data's speed in units of a NANOSECOND [1 billionth of a second]. My test programs could report back to the test engineer the time in nanoseconds an action [add number columns] took place. If it took too long, say 15 nanoseconds instead of 8 nanoseconds, the operation could be rewritten to optimize it. After this is done inside the program, the author of this article describes methods to shorten the external path -- or length of the highway -- the data bits travel on. For the test engineer, distance is time added, and that speed is also measured in nanoseconds. There can be an infinite number of slipups along the way. So, I guess, with the author's descriptions of just the mechanical means attempted to optimize the paths [speed] of trading data through computer networks, I have not only become more knowledgeable about HFT setups, but I now feel much less anxious about the effects of it on trading in general. HFT may be good, but as a software engineer myself, I KNOW it can't be perfect.That leaves a LOT of room for the rest of us to PROFIT.
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Old Aug 19, 2017, 8:47pm   #3
 
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The article is good, the book is a bit bias against the HFTs, I for one think the HFTs are good for the retail trader, because of the liquidity they create and the lowering of the bid/ask spread. For sure the big institution traders are against... The problem for the retail trader are the dark pools (another good book by the same name), because they essentially hide a portion of the market, but the big institutions love them, because they are part of it...
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