Difference between High Freq and Algo trading?

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Old Jun 16, 2012, 3:54pm   #1
 
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Difference between High Freq and Algo trading?

Hi,

In "All about High Frequency Trading", by Michael Durbin, he seems to imply that HF and algo trading are completely different and that HF is more about arbitrage/market-making whereas algo trading is about stat arb.

Can anybody advise on this?

Last edited by icl77; Jun 16, 2012 at 4:36pm.
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Old Jun 16, 2012, 4:19pm   #2
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Re: Difference between High Freq and Algo trading?

Executions for all trades should be fast regardless if it's algo or HF. An algo that doesn't trade often is not HF. But HF could mean different things to different people. Rather than guess, ask them what their definition of it is in the interview. But none of that makes much difference. Just get yourself across as an intelligent and pleasant kind of guy will more often get you the job than not.
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Old Jun 16, 2012, 4:29pm   #3
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Re: Difference between High Freq and Algo trading?

Good post by Joe.
If they want the code to run fast they are not talking about latency. Your code should be optimized for speed on the particular server you are using. In the highest sense that would mean processor specific assembly code. But as Joe said ask them exactly what they want. If they are interested in you they will be happy to explain it to you.

Good luck with the interview!

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Old Jun 17, 2012, 12:13pm   #4
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Re: Difference between High Freq and Algo trading?

Quote:
Originally Posted by icl77 View Post
HF and algo trading are completely different
HF covers a wide array of strategies. As such, algo trading may be high frequency, but not all HF is algo.
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Old Jun 17, 2012, 6:25pm   #5
 
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Re: Difference between High Freq and Algo trading?

icl77 started this thread
Quote:
Originally Posted by Rhody Trader View Post
HF covers a wide array of strategies. As such, algo trading may be high frequency, but not all HF is algo.
Ah ok- algo is a subset of HF
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Old Jun 17, 2012, 7:57pm   #6
 
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Angry Re: Difference between High Freq and Algo trading?

Quote:
Originally Posted by icl77 View Post
Ah ok- algo is a subset of HF
No, not all algo is HFT.

Looking up the definition of 'algorithm' would have saved you starting this thread:

'A process or set of rules to be followed in calculations or other problem-solving operations, esp. by a computer.'

With respect to trading I would say an algo trade is normally one which has rules coded and execution is also automated.

Rhody trader, please can you provide an example of a HF trade which isn't an algorithm? If it isn't algorithm based what is it? A manual trade?

Perhaps also google HFT / algo trading - there's plenty of articles on the subjects.

Last edited by rsh01; Jun 17, 2012 at 8:08pm.
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Old Jun 17, 2012, 9:09pm   #7
 
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Re: Difference between High Freq and Algo trading?

So you deleted your response...shame, I was looking fwd to replying to it.
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