Evolution of High Frequency Trading

Darkpool Trading

Advances in computer technology have supercharged the transmission and execution of orders and have compressed the holding periods required for investments. Once applied to quantitative simulations of market behavior conditioned on large sets of historical data, a new investment discipline, called high-frequency trading, was born. This chapter examines the historical evolution of trading to explain how technological breakthroughs impacted financial markets and facilitated the emergence of...

System Implementation

System Implementation Cycle

The models are often built in computer languages such as MatLab that provide a wide range of modeling tools but may not be suited perfectly for high-speed applications. Thus, once the econometric relationships are ascertained, the relationships are programmed for execution in a fast computer language such as C . Subsequently, the systems are tested in paper-trading with make-believe capital to ensure that the systems work as intended and any problems known as bugs are identified and fixed. Once...