The markets are constantly moving from one headline to the next – some of them having a profound impact on the markets. Last Sunday night “60 Minutes” aired a topic that has been lurking in the shadows for years, suddenly it jumped up and grabbed headlines raising concerns and paranoia with investors. High Frequency Trading (HFT) has dominated headlines over the last week prompting a federal investigation and hours of debate.
Michael Lewis, author of “Flash Boys”, has been on a publicity tour claiming the U.S. Stock Market is ‘rigged’. Is the average investor at a disadvantage, on the outside looking in at the security exchanges? This week we encourage you to view a letter being sent to our clients and friends of the firm (High Frequency Trading letter)
Here are some key facts and figures regarding High Frequency Trading:
- The SEC (U.S. Securities & Exchange Commission) authorized High Frequency Trading in 1998.
- HFT is based on algorithmic calculations many of them proprietary trading strategies specific to the firms that utilize them.
- Trades occur in fractions of a second – many times thousands of trades are placed trying to capture just a fraction of a cent.
- HFT is anything but a ‘Buy and Hold’ strategy – most positions are not even held overnight or for more than a few hours.
- It is estimated that HFT trading makes up over 50% of U.S. equity trading volume since 2009.
If you have any questions or would like to discuss the impact of HFT on your portfolio and
strategies that you are utilizing we would encourage you to contact us at your convenience. You can use the contact form below or email us at: firstname.lastname@example.org, please put HFT in the subject line.