9 ms·

How to Get a Job at a High Frequency Trading Firm

41 points by shogunmike 13y ago

bagosm 13y ago
I thought there was a consensus in this community on how the leading traders just squeeze money out of all other wannabe sharks. The skills I find most relevant are low ethics and networking (not the technological type of networking).
- hatred 13y ago
  ^^ We guys can spit out a few lines of code here and there too in addition to the above mentioned hard to find traits by you ;)
- CmonDev 13y ago
  If you include ethics into your decisions then suddenly you are not able to work for a lot of companies. Google - severe tax evasion, Facebook - collecting your personal info for dodgy reasons etc.
  - gaius 13y ago
    Not to mention the bubble-startup business model, raise a billion from VCs and blow it. That money belongs to pension funds, university endowments, charity trusts...
    - pron 13y ago
      It's not a zero-sum game like trading, though. You do try to benefit society and the economy, and even if you don't succeed, people make a living off that "blown" money.
      - mseebach 13y ago
        a) Trading isn't zero-sum. If you meant to say HFT, no, that isn't zero-sum either. b) Trying isn't enough. A billion blown is a billion blown, it doesn't matter what your intentions are - and if it does, I'm sure most HFT-traders are convinced that they are benefiting society and the economy. c) People are also making a living of off money spend in HFT-space, regardless of what their intentions are.
      - CmonDev 13y ago
        The only thing business with shareholders wants is maximizing the profits. Besides, how are you going to IPO your start-up without traders involved? Capitalism without trading sounds like communism without common property.
        pron 13y ago
        A stock exchange doesn't need traders. We all buy and sell things all the time without the help of traders. Retailers and importers provide, in their domain, a much more valuable service than traders do in theirs. We don't even need traders for traditional risk-reducing options trading for farmers and manufacturers. > The only thing business with shareholders wants is maximizing the profits. In the US, generally yes. In other countries (like Germany), businesses have other goals, like providing sustenance to workers.
        CmonDev 13y ago
        "like providing sustenance to workers." when enforced by government that is, in some countries you don't even have to pay tax.
        pron 13y ago
        That government is elected by the people. It's not a foreign occupier. So I guess that the people of Germany have chosen to make businesses not just about maximizing profit.
      - gaius 13y ago
        It's not clear to me how society benefits from ever more intrusive ways to show people ads, and "people make a living" in that context is the same as Reagan's so-called "trickle down economics".
  - pron 13y ago
    > If you include ethics into your decisions... By definition (almost), ethics is the systematic study of what one should or should not do. Are you suggesting ignoring the systematic study of what one should or should not do when one has to decide what one should or should not do? > then suddenly you are not able to work for a lot of companies... Well, every person has their own levels of comfort with various practices. Ethics doesn't give you clear-cut answers, it's just a way to think about decisions.
- pron 13y ago
  Let's put it this way: if the character of the people you work with matters to you, then HFT is not something you'd want to do.
  - theorique 13y ago
    Sources? Are HF traders known to be objectively more “evil” people than others in the finance industry, or vicars of country churches, or social workers, or cabinet ministers? If so, I’d love to see the studies.
    - pron 13y ago
      I base this on the few people I know in this industry. Not scientific by any means. Now, people are hardly ever "evil", and they certainly never consider themselves evil. But even strangers would hardly call traders evil; they're just... how shall I put this... if you know some people working on (in?) Wall Street then you know the type. Of course, there are plenty of technical people working on the highly technical aspects of HFT with little regard to the domain itself, who don't fit the prototype; still, there are very few idealists in that industry.
      - javert 13y ago
        > they're just... how shall I put this... if you know some people working in Wall Street then you know the type. Well, I don't know anyone working on Wall Street and I don't know the "type." Can you give concrete examples or details to substantiate your claim and make it specific? What is it in particular that you object to about these people? No offense, but as a disclaimer, I don't want to come across as giving your claim too much credence. In the abstract, any form of trading is a life-supporting activity (someone is voluntarily choosing to trade with you to mutual benefit) and thus is noble, other factors being equal (e.g. you're not committing fraud, etc.).
        pron 13y ago
        You're right. I'm sorry for taking the ad-hominem path. We should discuss the practice, not the practitioners (what is it that some Christians say? Love the sinner, hate the sin? ;)
- davidw 13y ago
  There are people here who work in that field, and they don't strike me as having 'low ethics', offhand. The consensus I'm more favorable to on HN is avoiding knee-jerk insults to people who you don't even know. I'm not wild about HFT myself, but these sorts of nasty comments are something I would prefer not to see in this community.
  - pron 13y ago
    > but these sorts of nasty comments are something I would prefer not to see in this community. Because I've made comments in the same vein, I had given some thought to the matter before posting them. You are, of course, right. These are gross generalizations, and I think most readers here would recognize them as such. However, I think that another principle trumps here, and that is setting a sort of "baseline" ethics. The HN community is composed mostly of engineers, who for centuries have had the tendency to concentrate on the technical challenge at hand rather than the social and moral ramifications of their products. By establishing a certain crude (I admit) sentiment that HFT is "wrong unless proven otherwise", or, at the very least, that it demands some serious thought before engaging in, we draw a blurry, faint red line that we, as engineers, should pay attention to. Naturally, this applies to all undertakings, but in our community, HFT serves as a suitable exemplar. I think.
    - DanBC 13y ago
      Do you see any difference between saying "HFT is scummy" and "the people doing HFT are scummy"?
      - pron 13y ago
        Of course! People don't generally set out to do wrong. Most "industrial grade" wrongs are done by people with good, or neutral intentions.
- tptacek 13y ago
  Interesting. I thought the consensus on HN was, we should form unshakeable opinions about entire industries based on Matt Taibbi articles in Rolling Stone, or, better, based on comment-driven games of telephone starting from the most colorful sentences in Taibbi articles, and then that we should wield those opinions to cast aspersions on strangers on HN to make us feel better about ourselves. Oh, wait. Did I just say the same thing you did? I'm sorry. Carry on.
leokun 13y ago
> While many UHFT firms have moved towards custom hardware (both for processing and networking), some less latency-sensitive systematic trading firms still make use of multithreaded C, C++ and Java (with custom garbage collection). Aside from the hiring theme I have a question. I'd think given that network speeds would start being the bigger bottleneck. Is location at all important to these firms? The speed of light is fast, but the closer you are to the exchanges, the better the advantage over competitors must be.
- mseebach 13y ago
  From what I've read on the subject, yes, location is critical. As I understand it, HFTs are co-located in the exchanges' datacenters.
- skj 13y ago
  It is. There's a massive colo right next door to the NYSE.
  - nohuck13 13y ago
    The NYSE matching engines are in Mahwah, NJ, about 20 miles from the NYSE floor. If you rent colo space there's you're actually in the same building.
- jhspaybar 13y ago
  I can't find the story now, but I read about an HFT making a play on the bid/ask spreads between new york and chicago, they spent a large sum of money to build their data center somewhere in the appalachians to save themselves something like 3 ms in total transit time.
  - junto 13y ago
    I think you are referring to an article called "Barbarians at the Gateways" by Jacob Loveless, that recently popped up on HN: - Web: http://queue.acm.org/detail.cfm?ref=rss&id=2536492 http://queue.acm.org/detail.cfm?ref=rss&id=2536492 - PDF: http://portal.acm.org/ft_gateway.cfm?id=2536492&type=pdf http://portal.acm.org/ft_gateway.cfm?id=2536492&type=pdf
kayoone 13y ago
While i find the technological challenges in HFT very exciting, i would never want to work for the companies benefitting from that work. If that means i will make less money and someone else will come in and do it, then so be it.
- vasilipupkin 13y ago
  That should exclude most hardware vendors, since they benefit from high frequency traders buying up tons of hardware
- CmonDev 13y ago
  Check if your company invests (e.g. your pension pot) into one of the portfolios that sub-allocates to HTF hedge fund as well. You might want to pull out then. So immoral.
  - kaeawc 13y ago
    Maybe they already have.
- theorique 13y ago
  why?
  - allochthon 13y ago
    In my mind, the value that HFT adds is theoretical at best. The Economist could surely rationalize it in terms of "finding the right prices" or "arbitrage" or something. To me it looks like a systematic way of taking advantage of people who aren't using it.
    - theorique 13y ago
      Would it make more sense to look at it as similar to a poker game? Relatively little economic value is created or destroyed in ultra-short time scales, so the players in that game are essentially playing against each other (minus some small cut taken by the casino). The ‘good’ players thrive until they reach maximum size for their niche. The ‘bad’ players leave the business. Customers such as long term investors, institutional money, etc, benefit through narrowed spreads and reduced transaction costs. You could call it a vicious, dog-eat-dog business, but the dogs aren’t really a threat to anybody else.
pron 13y ago
If we put aside for a second the overall sleaziness of this industry that makes working for it very unattractive, isn't HFT at a dead end? Do people still make a lot of money off it? Hasn't it reached the tail-end of diminishing returns?
- strongvigilance 13y ago
  I believe the profits have dropped a lot recently, as competition has driven down margins for everyone involved. http://www.businessweek.com/articles/2013-06-06/how-the-robots-lost-high-frequency-tradings-rise-and-fall http://www.businessweek.com/articles/2013-06-06/how-the-robo...
- kasey_junk 13y ago
  It really depends on how you define HFT. If we define it as the author does, then it's not so much a dead end, rather it is really hard to move in on. I like to think of latency arbitrage (including pairs trades, exchange arb, etc.) as a utility. It takes a massive amount of investment, but if you do that you can get a very steady return. The problem is that in most of those trades there is no money in being the second best. These leads to an environment where the people already invested are in an arms race to keep at the front. If on the other hand, you are talking about other forms of algorithmic trading, there is still money to be made by being smart, having insight, having better procedures, or faster time to market etc. The arms race in latency arbitrage has actually made a lot of this easier as it has dramatically brought down the cost of entry to the non-bleeding edge of latency use cases.
  - pron 13y ago
    > there is still money to be made by being smart, having insight, having better procedures Other than algorithmic speculation (sentiment analysis, etc), is it still possible to come up with better (non-speculative) procedures that yield substantial profit?
    - kasey_junk 13y ago
      Depends on what you mean by "non-speculative" & "substantial". All trading is "speculative" in some sense, but yes you can still make a tidy living in the algorithmic trading space.
CmonDev 13y ago
Not a helpful guide as the paths listed almost guarantee that qualifying person would be aware of ways to enter. Would be more interested in the guide "Hot to get a job in HF while being a mainstream web dev who graduated from an unknown uni".
ninetenel 13y ago
Just email them pictures of your erect penis .. that's how i got mine
known 13y ago
You may have to leave your CONSCIENCE at your home.
jgalt212 13y ago
HFT is 1. not a growth industry 2. the regulators are keen to clamp down on this sort of activity. As such, anyone with the intellectual chops to master HFT, I'd suggest they apply it to greener pastures. Wasn't AdMeld started by former HFT people?
- gaius 13y ago
  That's what I think of, sure, when I think of where programmers could best use their talent for the advancement of mankind. Not curing cancer or AIDS with protein folding, not probing the mysteries of the universe at the LHC, but finding new ways to make people click on ads.
  - javert 13y ago
    jgalt was intentionally giving selfish reasons for people to not go into HFT. Apparently he doesn't share with you the premise that people ought to work on whatever "advances mankind."
erikig 13y ago
I'm surprised that the morality of HFT firms keeps coming up even among technically enlightened audiences. I'll preface this by saying I'm not a HFT or affiliated to one but I strongly believe that HTFs and UHTFs play a valuable role in well regulated markets. We can argue endlessly as to whether the financial markets are well regulared but for this discussion let us assume they are pretty close and that if they aren't there's an HFT out there that's working to discover why and capitalize on it. HFTs also provide massive liquidity and allow people that trade large positions (Pensions, Insiders e.g start up founders etc) to enter and exit into the market without causing massive waves in the instruments they are trading.
- pron 13y ago
  I think we should be delighted that the morality of anything comes up among technically enlightened audiences. For years, us engineers have been accused (often justly) for not caring. The value HFT, day trading, and stock traders in general provide is far from clear-cut. When considering the merit of some economic enterprise you can't just take into account its local effects. For example, casinos also provide value: they provide entertainment and they feed a lot of people. But it's uncertain whether our society is better off with them or without them.
chinmoy 13y ago
I'm happy to see this pop up on HN since HFT is something I've been looking into lately. If you're interested to dig deeper into HFT and algorithmic trading, 'Inside the Black Box' will be a good read. Link: www.amazon.com/Inside-Black-Box-Quantitative-Frequency/dp/1118362411 If you want to take your reading further, there are some great recommendations on the review section. And just to get an insider look into quant traders and the effect HFT can have on the market, I also recommend these two short documentaries made by the dutch national TV: 1. Quants: The Alchemists of Wall Street https://www.youtube.com/watch?v=ed2FWNWwE3I https://www.youtube.com/watch?v=ed2FWNWwE3I 2. Money & Speed: Inside the Black Box https://www.youtube.com/watch?v=aq1Ln1UCoEU https://www.youtube.com/watch?v=aq1Ln1UCoEU
Choronzon 13y ago
Keep the following in mind.. HFT is not very profitable anymore.There are a fair number of companies in the field now. HFT tends to be algorithmically simplistic.This is not because stupid people are working there but its very difficult to have algorithmic complexity and speed,and speed is more important. It is very much a winner takes all game,profits are not evenly distributed,being fast is VERY important. However good you are you are not a trader.You are a codemonkey. You will never be rewarded or compensated as a trader in most of these firms(some firms like Rentech are an exception to this,but rentech is not typical high frequency). Your hourly rate will probably not be worth it. When you factor in variable compensation(ie bonus) which is not guaranteed and horrible working hours you would in most cases be better off with some boring bank java contract for compensation.
Choronzon 13y ago
On the topic of the utility of HFT my personal opinion of is it reduces spread costs but adds systemic fragility. I actually doubt stock markets are socially utile,let alone HFT but that is an argument for another day. The real trading problem when we look at access and information asymmetry is not HFT but dark pools.HFTs typically all compete for the same pie anyway.

41 points by shogunmike 13y ago

I thought there was a consensus in this community on how the leading traders just squeeze money out of all other wannabe sharks. The skills I find most relevant are low ethics and networking (not the technological type of networking).

hatred 13y ago
^^ We guys can spit out a few lines of code here and there too in addition to the above mentioned hard to find traits by you ;)
CmonDev 13y ago
If you include ethics into your decisions then suddenly you are not able to work for a lot of companies. Google - severe tax evasion, Facebook - collecting your personal info for dodgy reasons etc.
- gaius 13y ago
  Not to mention the bubble-startup business model, raise a billion from VCs and blow it. That money belongs to pension funds, university endowments, charity trusts...
  - pron 13y ago
    It's not a zero-sum game like trading, though. You do try to benefit society and the economy, and even if you don't succeed, people make a living off that "blown" money.
    - mseebach 13y ago
      a) Trading isn't zero-sum. If you meant to say HFT, no, that isn't zero-sum either. b) Trying isn't enough. A billion blown is a billion blown, it doesn't matter what your intentions are - and if it does, I'm sure most HFT-traders are convinced that they are benefiting society and the economy. c) People are also making a living of off money spend in HFT-space, regardless of what their intentions are.
    - CmonDev 13y ago
      The only thing business with shareholders wants is maximizing the profits. Besides, how are you going to IPO your start-up without traders involved? Capitalism without trading sounds like communism without common property.
      - pron 13y ago
        A stock exchange doesn't need traders. We all buy and sell things all the time without the help of traders. Retailers and importers provide, in their domain, a much more valuable service than traders do in theirs. We don't even need traders for traditional risk-reducing options trading for farmers and manufacturers. > The only thing business with shareholders wants is maximizing the profits. In the US, generally yes. In other countries (like Germany), businesses have other goals, like providing sustenance to workers.
        CmonDev 13y ago
        "like providing sustenance to workers." when enforced by government that is, in some countries you don't even have to pay tax.
        pron 13y ago
        That government is elected by the people. It's not a foreign occupier. So I guess that the people of Germany have chosen to make businesses not just about maximizing profit.
    - gaius 13y ago
      It's not clear to me how society benefits from ever more intrusive ways to show people ads, and "people make a living" in that context is the same as Reagan's so-called "trickle down economics".
- pron 13y ago
  > If you include ethics into your decisions... By definition (almost), ethics is the systematic study of what one should or should not do. Are you suggesting ignoring the systematic study of what one should or should not do when one has to decide what one should or should not do? > then suddenly you are not able to work for a lot of companies... Well, every person has their own levels of comfort with various practices. Ethics doesn't give you clear-cut answers, it's just a way to think about decisions.
pron 13y ago
Let's put it this way: if the character of the people you work with matters to you, then HFT is not something you'd want to do.
- theorique 13y ago
  Sources? Are HF traders known to be objectively more “evil” people than others in the finance industry, or vicars of country churches, or social workers, or cabinet ministers? If so, I’d love to see the studies.
  - pron 13y ago
    I base this on the few people I know in this industry. Not scientific by any means. Now, people are hardly ever "evil", and they certainly never consider themselves evil. But even strangers would hardly call traders evil; they're just... how shall I put this... if you know some people working on (in?) Wall Street then you know the type. Of course, there are plenty of technical people working on the highly technical aspects of HFT with little regard to the domain itself, who don't fit the prototype; still, there are very few idealists in that industry.
    - javert 13y ago
      > they're just... how shall I put this... if you know some people working in Wall Street then you know the type. Well, I don't know anyone working on Wall Street and I don't know the "type." Can you give concrete examples or details to substantiate your claim and make it specific? What is it in particular that you object to about these people? No offense, but as a disclaimer, I don't want to come across as giving your claim too much credence. In the abstract, any form of trading is a life-supporting activity (someone is voluntarily choosing to trade with you to mutual benefit) and thus is noble, other factors being equal (e.g. you're not committing fraud, etc.).
      - pron 13y ago
        You're right. I'm sorry for taking the ad-hominem path. We should discuss the practice, not the practitioners (what is it that some Christians say? Love the sinner, hate the sin? ;)
davidw 13y ago
There are people here who work in that field, and they don't strike me as having 'low ethics', offhand. The consensus I'm more favorable to on HN is avoiding knee-jerk insults to people who you don't even know. I'm not wild about HFT myself, but these sorts of nasty comments are something I would prefer not to see in this community.
- pron 13y ago
  > but these sorts of nasty comments are something I would prefer not to see in this community. Because I've made comments in the same vein, I had given some thought to the matter before posting them. You are, of course, right. These are gross generalizations, and I think most readers here would recognize them as such. However, I think that another principle trumps here, and that is setting a sort of "baseline" ethics. The HN community is composed mostly of engineers, who for centuries have had the tendency to concentrate on the technical challenge at hand rather than the social and moral ramifications of their products. By establishing a certain crude (I admit) sentiment that HFT is "wrong unless proven otherwise", or, at the very least, that it demands some serious thought before engaging in, we draw a blurry, faint red line that we, as engineers, should pay attention to. Naturally, this applies to all undertakings, but in our community, HFT serves as a suitable exemplar. I think.
  - DanBC 13y ago
    Do you see any difference between saying "HFT is scummy" and "the people doing HFT are scummy"?
    - pron 13y ago
      Of course! People don't generally set out to do wrong. Most "industrial grade" wrongs are done by people with good, or neutral intentions.
tptacek 13y ago
Interesting. I thought the consensus on HN was, we should form unshakeable opinions about entire industries based on Matt Taibbi articles in Rolling Stone, or, better, based on comment-driven games of telephone starting from the most colorful sentences in Taibbi articles, and then that we should wield those opinions to cast aspersions on strangers on HN to make us feel better about ourselves. Oh, wait. Did I just say the same thing you did? I'm sorry. Carry on.

leokun 13y ago

> While many UHFT firms have moved towards custom hardware (both for processing and networking), some less latency-sensitive systematic trading firms still make use of multithreaded C, C++ and Java (with custom garbage collection). Aside from the hiring theme I have a question. I'd think given that network speeds would start being the bigger bottleneck. Is location at all important to these firms? The speed of light is fast, but the closer you are to the exchanges, the better the advantage over competitors must be.

mseebach 13y ago
From what I've read on the subject, yes, location is critical. As I understand it, HFTs are co-located in the exchanges' datacenters.
skj 13y ago
It is. There's a massive colo right next door to the NYSE.
- nohuck13 13y ago
  The NYSE matching engines are in Mahwah, NJ, about 20 miles from the NYSE floor. If you rent colo space there's you're actually in the same building.
jhspaybar 13y ago
I can't find the story now, but I read about an HFT making a play on the bid/ask spreads between new york and chicago, they spent a large sum of money to build their data center somewhere in the appalachians to save themselves something like 3 ms in total transit time.
- junto 13y ago
  I think you are referring to an article called "Barbarians at the Gateways" by Jacob Loveless, that recently popped up on HN: - Web: http://queue.acm.org/detail.cfm?ref=rss&id=2536492 http://queue.acm.org/detail.cfm?ref=rss&id=2536492 - PDF: http://portal.acm.org/ft_gateway.cfm?id=2536492&type=pdf http://portal.acm.org/ft_gateway.cfm?id=2536492&type=pdf

kayoone 13y ago

While i find the technological challenges in HFT very exciting, i would never want to work for the companies benefitting from that work. If that means i will make less money and someone else will come in and do it, then so be it.

vasilipupkin 13y ago
That should exclude most hardware vendors, since they benefit from high frequency traders buying up tons of hardware
CmonDev 13y ago
Check if your company invests (e.g. your pension pot) into one of the portfolios that sub-allocates to HTF hedge fund as well. You might want to pull out then. So immoral.
- kaeawc 13y ago
  Maybe they already have.
theorique 13y ago
why?
- allochthon 13y ago
  In my mind, the value that HFT adds is theoretical at best. The Economist could surely rationalize it in terms of "finding the right prices" or "arbitrage" or something. To me it looks like a systematic way of taking advantage of people who aren't using it.
  - theorique 13y ago
    Would it make more sense to look at it as similar to a poker game? Relatively little economic value is created or destroyed in ultra-short time scales, so the players in that game are essentially playing against each other (minus some small cut taken by the casino). The ‘good’ players thrive until they reach maximum size for their niche. The ‘bad’ players leave the business. Customers such as long term investors, institutional money, etc, benefit through narrowed spreads and reduced transaction costs. You could call it a vicious, dog-eat-dog business, but the dogs aren’t really a threat to anybody else.

pron 13y ago

If we put aside for a second the overall sleaziness of this industry that makes working for it very unattractive, isn't HFT at a dead end? Do people still make a lot of money off it? Hasn't it reached the tail-end of diminishing returns?

strongvigilance 13y ago
I believe the profits have dropped a lot recently, as competition has driven down margins for everyone involved. http://www.businessweek.com/articles/2013-06-06/how-the-robots-lost-high-frequency-tradings-rise-and-fall http://www.businessweek.com/articles/2013-06-06/how-the-robo...
kasey_junk 13y ago
It really depends on how you define HFT. If we define it as the author does, then it's not so much a dead end, rather it is really hard to move in on. I like to think of latency arbitrage (including pairs trades, exchange arb, etc.) as a utility. It takes a massive amount of investment, but if you do that you can get a very steady return. The problem is that in most of those trades there is no money in being the second best. These leads to an environment where the people already invested are in an arms race to keep at the front. If on the other hand, you are talking about other forms of algorithmic trading, there is still money to be made by being smart, having insight, having better procedures, or faster time to market etc. The arms race in latency arbitrage has actually made a lot of this easier as it has dramatically brought down the cost of entry to the non-bleeding edge of latency use cases.
- pron 13y ago
  > there is still money to be made by being smart, having insight, having better procedures Other than algorithmic speculation (sentiment analysis, etc), is it still possible to come up with better (non-speculative) procedures that yield substantial profit?
  - kasey_junk 13y ago
    Depends on what you mean by "non-speculative" & "substantial". All trading is "speculative" in some sense, but yes you can still make a tidy living in the algorithmic trading space.

CmonDev 13y ago

Not a helpful guide as the paths listed almost guarantee that qualifying person would be aware of ways to enter. Would be more interested in the guide "Hot to get a job in HF while being a mainstream web dev who graduated from an unknown uni".

ninetenel 13y ago

Just email them pictures of your erect penis .. that's how i got mine

known 13y ago

You may have to leave your CONSCIENCE at your home.

jgalt212 13y ago

HFT is 1. not a growth industry 2. the regulators are keen to clamp down on this sort of activity. As such, anyone with the intellectual chops to master HFT, I'd suggest they apply it to greener pastures. Wasn't AdMeld started by former HFT people?

gaius 13y ago
That's what I think of, sure, when I think of where programmers could best use their talent for the advancement of mankind. Not curing cancer or AIDS with protein folding, not probing the mysteries of the universe at the LHC, but finding new ways to make people click on ads.
- javert 13y ago
  jgalt was intentionally giving selfish reasons for people to not go into HFT. Apparently he doesn't share with you the premise that people ought to work on whatever "advances mankind."

erikig 13y ago

I'm surprised that the morality of HFT firms keeps coming up even among technically enlightened audiences. I'll preface this by saying I'm not a HFT or affiliated to one but I strongly believe that HTFs and UHTFs play a valuable role in well regulated markets. We can argue endlessly as to whether the financial markets are well regulared but for this discussion let us assume they are pretty close and that if they aren't there's an HFT out there that's working to discover why and capitalize on it. HFTs also provide massive liquidity and allow people that trade large positions (Pensions, Insiders e.g start up founders etc) to enter and exit into the market without causing massive waves in the instruments they are trading.

pron 13y ago
I think we should be delighted that the morality of anything comes up among technically enlightened audiences. For years, us engineers have been accused (often justly) for not caring. The value HFT, day trading, and stock traders in general provide is far from clear-cut. When considering the merit of some economic enterprise you can't just take into account its local effects. For example, casinos also provide value: they provide entertainment and they feed a lot of people. But it's uncertain whether our society is better off with them or without them.

chinmoy 13y ago

I'm happy to see this pop up on HN since HFT is something I've been looking into lately. If you're interested to dig deeper into HFT and algorithmic trading, 'Inside the Black Box' will be a good read. Link: www.amazon.com/Inside-Black-Box-Quantitative-Frequency/dp/1118362411 If you want to take your reading further, there are some great recommendations on the review section. And just to get an insider look into quant traders and the effect HFT can have on the market, I also recommend these two short documentaries made by the dutch national TV: 1. Quants: The Alchemists of Wall Street https://www.youtube.com/watch?v=ed2FWNWwE3I https://www.youtube.com/watch?v=ed2FWNWwE3I 2. Money & Speed: Inside the Black Box https://www.youtube.com/watch?v=aq1Ln1UCoEU https://www.youtube.com/watch?v=aq1Ln1UCoEU

Choronzon 13y ago

Keep the following in mind.. HFT is not very profitable anymore.There are a fair number of companies in the field now. HFT tends to be algorithmically simplistic.This is not because stupid people are working there but its very difficult to have algorithmic complexity and speed,and speed is more important. It is very much a winner takes all game,profits are not evenly distributed,being fast is VERY important. However good you are you are not a trader.You are a codemonkey. You will never be rewarded or compensated as a trader in most of these firms(some firms like Rentech are an exception to this,but rentech is not typical high frequency). Your hourly rate will probably not be worth it. When you factor in variable compensation(ie bonus) which is not guaranteed and horrible working hours you would in most cases be better off with some boring bank java contract for compensation.

Choronzon 13y ago

On the topic of the utility of HFT my personal opinion of is it reduces spread costs but adds systemic fragility. I actually doubt stock markets are socially utile,let alone HFT but that is an argument for another day. The real trading problem when we look at access and information asymmetry is not HFT but dark pools.HFTs typically all compete for the same pie anyway.