Has high-frequency trading affected your strategies?

I work with about 6 setups that are my core method for trading but I've noticed that high-frequency trading has moved half of them to very low profitability recently.

I only suspect it is HFT that is the culprit because they strategies rely on larger intra-day moves which have since disappeared.

I'm curious as to if others are having to re-tool their methods a bit because of more high frequency trading these days?

Thanks,

Tim

TraderInterviews said:

I work with about 6 setups that are my core method for trading but I've noticed that high-frequency trading has moved half of them to very low profitability recently.

I only suspect it is HFT that is the culprit because they strategies rely on larger intra-day moves which have since disappeared.

I'm curious as to if others are having to re-tool their methods a bit because of more high frequency trading these days?

Thanks,

Tim

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I know the symptoms very well. I have an entry method that can be extremely profitable for either the hourly and 15 minute (keeping an eye on 4 hr trend) or further down, the 15 minute (keeping an eye on hourly trend) and the 5 minute. I've yet to test/try this any higher.

You trade less on the higher time frame and when it's trending well and getting good intra day moves you clean up, the wins are bigger and you pay much less in spread although you do give back more to the market at the end of a move and sometimes have to sit and watch what was a 20 pip winner turn into a scratch trade.

On the higher timeframes I trade, when the hourly and 4 hourly trends are close and the market is flat/sideways is when I get killed. Hourly trend whipping above and below the 4 hour is a bit of a nightmare. I've learned to trade much smaller positions when it's like this - 0.5% risk and less.

The other option is to switch to the smaller timescale and keep the position size up. But likewise on the shorter timescale, when the hourly and 15 minute trends are flat/together you get whipped. This also tends to happen more often as the trends move together and apart that much more often.


On the smaller timeframe you also pay much more in spread both due to frequency of entry and its percentage of any likely move. You also get more false signals to enter.

As you can tell I love sideways-ish markets.

And that's got me thinking "Why go smaller - how about going larger". Must check this out on a previous market that caused a drawdown with my method

It should have no material effect to trend traders trading strong trends with high positive expectancy.

oildaytrader said:

It should have no material effect to trend traders trading strong trends with high positive expectancy.

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Cool blanket statement bro

nunrgguy said:

Cool blanket statement bro

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Agreed .Over an extended study of thousands of trades, a few ticks won't have much impact.In a losing sequence it hurts , but overall it does not have a material impact on great trading systems.

If your methods /systems are average , need to work on them rather than look for excuses.

These crooked schemes have been there for 40 years, they have just become automated recently.Wall street /city has always been rigged against the small guy.

oildaytrader said:

If your methods /systems are average , need to work on them rather than look for excuses.

These crooked schemes have been there for 40 years, they have just become automated recently.Wall street /city has always been rigged against the small guy.

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Cool attack there bro

nunrgguy said:

Cool attack there bro

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The great man once noticed a trader cum trading instructor changing from system to system.He witnessed a so called professional trader go through 6 systems, finally the mentor gave up and started betting using the martingale money management

Markets change and systems fail regularly.It has always happened in the past.Look for a system to beat changing markets.

Why get suspicion somebody is doing you?

Cool assumption bro

nunrgguy said:

Cool assumption bro

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Prove it then, it is high frequency not his own set ups in changing market conditions

oildaytrader said:

The great man once noticed a trader cum trading instructor changing from system to system.He witnessed a so called professional trader go through 6 systems, finally the mentor gave up and started betting using the martingale money management

Markets change and systems fail regularly.It has always happened in the past.Look for a system to beat changing markets.

Why get suspicion somebody is doing you?

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I wonder if you would you argue that markets change in lower TF's more regularly than higher one's?

oildaytrader said:

Prove it then, it is high frequency not his own set ups in changing market conditions

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Wrong end of the stick bro

Rossini said:

I wonder if you would you argue that markets change in lower TF's more regularly than higher one's?

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I don't have the answer because I have never been able to find a LTF profitable automated strategy to back test rigorously.I suspect they do because of random inputs,we see trends where none exist and when there are trends they seem noise.

Market conditions definitely change regularly in higher time frames.

nunrgguy said:

Wrong end of the stick bro

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We can't prove it is HFT or change in market conditions if set ups are in LTF, at least I don't believe we can.:cheesy:

There is an interesting read here , but would the price wait for you limit order in trending markets?Don't kid yourselves.It will be flying with unfilled limit orders

http://www.trade2win.com/boards/gen...mpact-high-frequency-trading.html#post1020558

The stick has more than two ends bro