How High Frequency Trading works ?

“Algo trading is here to stay and it is the future of trading”

High-frequency trading is a subset of Algo trading which involves buying and selling of a huge number of stocks in very less time. High-frequency trading is a program used as a trading platform. It uses powerful computers for the transaction of a large number of data in a matter of seconds. The complex algorithms used in this program make it feasible to analyze multiple markets simultaneously and execute orders based on market conditions. The execution speed plays the key role in these transactions. The more the speed, the more is profit gained by the trader. High-frequency trading has been in-demand as exchanges have started offering incentives for companies to add liquidity to market. Market liquidity proves to be the biggest advantage of HFT. HFT involves buying and selling securities in a very small time frame and profiting from the small margins involved.

The Year 2008: Beginning Of Algorithmic Trading In India

On April 3rd 2008, Securities & Exchange Board of India (SEBI), started allowing Direct Market Access facility which allows buying or selling of orders by institutional clients without manual intervention by brokers. Direct Market Access (DMA) enables clients to access the exchange trading system through brokers’ infrastructure but without manual intervention.

Amongst the global recession, this decision by Indian regulators was a welcomed change by the entire banking and securities market change.

It was expected that this change would result in greater transparency, increased liquidity, lower impact costs for large orders, better audit trails and better use of hedging and arbitrage opportunities.

High-frequency trading has penetrated into Indian finance sector pretty well by now. The persistence of its growth should be duly considered. High-frequency trading realm is getting crowded day by day with companies like:

Acceletrade Technologies (Bangalore/Gurgaon)

Alphagrep Securities (Bangalore/Mumbai)

APT Portfolio (Gurgaon)

Centillion Research (Bangalore)

Dolat Group (Mumbai)

Estee Advisors (Gurgaon)

Graviton Research (Gurgaon)

iRageCapital (Mumbai)

Open Futures (Delhi)

Plutus Research (Bangalore)

Quadeye Securities(Gurgaon)

Quantitative Brokers (Chennai)

Tower Research (Gurgaon)

WallSoft Labs (Gurgaon)

How it works :- - High-frequency trading - HFT is a program trading platform that uses powerful computers to transact a large number of orders at fractions of a second. It uses complex algorithms to analyze multiple markets and execute orders based on market conditions.

Technology Roles in HFT's :- High-frequency trading has given way to several job profiles around globe. In India, companies hunt for skilled individuals to fill up positions like C++ Developer, Quant Analyst, Strategy Developer, Quant Trader and Networks/System Administrator.

Quant Analyst :- is a role revolving around proficiency of quantitative skills with working knowledge of using quant tools such as R, Python, and Matlab. This is a field which is attractive to individuals who are interested in building their own financial models.

Strategy Developer :-, as the name suggests, involves coding new strategies or modify existing ones. They are required to code strategies into a trading model developed by a quant analyst.

Quantitative Trader :- A trader is person or entity, in finance, who buys and sells financial instruments such as stocks, bonds, commodities, derivatives, and mutual funds in capacity of agent, hedger, arbitrageur, or speculator.

C++ Developer :- A person who is involves in making system execution fast (Called Latency) They are required to code models, API's into a trading platform for getting high speed.

An individual who seeks thrills in solving puzzles and complexities of the financial world will definitely be enticed by a trading role. This is a position that goes on to test your problem-solving abilities.

Algo trading and HFT exist in good volumes in India offering really high-paying and promising job roles. Although still occupying just one-third of the Indian financial sector, but this technology has a promising future and worth making a career in.