> > This is a nice plot for a movie, but not how HFT is really done. It's so > > much easier to colocate on the same datacenter of the exchange and run > > algorithms from there; while those algorithms need humans to guide their > > strategy, the human thought process takes a couple of seconds anyways. So > > the real HFTs keep using the defined strategy while the human controller > > doesn't tell it otherwise. > > For faster access to one exchange, yes, absolutely, colocate at the > exchange. But there's more then one exchange. >
Yes, but to do real HFT you will need to colocate at each exchange. Otherwise your competitors have a head start on you. > > As one example, many index futures trade in Chicago. The stocks that > make up those indices mostly trade in New York. There's money to be > made on the arbitrage, if your Chicago algorithms get faster > information from New York (and vice versa) than everyone else's > algorithms. > Most traded index futures are longer than just that day closing, usually months to a year in advance. They are influenced mostly by traders perception on economic futures, and the current stocks valuation is a poor proxy for it. There is more chance in reading the news feeds and speculating its impact on perception than stocks. Rubens
