HIGH-FREQUENCY TRADING

As a long-time subscriber to your magazine, I found your feature on HFT trading to be highly informative and useful. Is it true that HFT or algorithmic traders generally perform better than manual day traders?

- Manas Chopade

Editor Responds: Thank you for writing to us. As far as your query goes, no, it is not absolutely true to say that high-frequency trading (HFT) generally beats manual day traders. But it depends on what kind of day traders you are referring to. If you are talking about day traders who take benefit from the arbitrage opportunities or market inefficiencies, then yes, machines can do such things much faster. A machine can send thousands of orders in a second so there is no match there. However, if we are talking about traders who are analyse the data and execute their orders in a manual way but are much more researched and engage in a lot of homework on their side, then no, it doesn’t matter. We hope this answers your question. Please do keep writing to us with your queries.