Institutions have invested into HFT, in the hope of gaining a millisecond advantage over their rivals. But 2014, that will all change?!
In Raging Bulls I have disclosed my personal view to it.
Recently, Wired has issued a special edition on 2014 Trends. With "HFT Will Meet Its Maker", as one. In the article they come to a quite similar view. HFT is now recognized as menace to others and even itself.
Why? It has hugely increased trading volumes and there was some severe cases were shares collapsed for unknown reasons. A kind of overreaction. A major trading house, Knight Capital, lost almost half a billion USD in less than an hour.
Maybe as a result HFT is in decline. Profits are falling.
I hope that in the future trades will be slow enough for intelligent human-machine interaction and some analytical work, and Beat the Market - Let Your House Cat Robot Invest will be just a joke. To identify the optimal risk is the key. This needs what-if analysis - comprehensive scenario simulation. Even with blazingly fast engines they need a little time. BTW, neuroscientists tell us that what-if questions lead us from fear to free thinking.
Picture from sehfelder
Picture from sehfelder
