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The Secret of Algorithmic TradingArticle Summary: The use of computers for trading purpose is called algorithmic trading. The algorithm of the computer decides on what orders has to be placed, price of the trade, quantity of the trade etc.
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The Algorithmic trading system uses the advanced models of mathematics for making decisions for trading. The rule with which the model is built determines the time taken for placing an order and the impact that it will cause. The trading is usually done in bulk blocking of shares and dividing them into smaller blocks. The complex algorithm decides when the purchase of smaller blocks has to be made. The principal strategy behind the High Frequency [url=http://hnqgcyy.com/guestbook.asp]jordan pas[/url] Trading is that the HFTs use [url=http://www.mnfruit.com/airjordan.php]jordan pas cher[/url] passive orders that stay in the limit and do not spread until they are cancelled or filed. This feature allows the HFTs to profit from the rebates and bid ask spread. The profits got here offsets the losses occurred due to the providing liquidity for the traders [url=http://www.mxitcms.com/tiffany/]tiffany outlet[/url] who drive the stocks directionally. The HFT strategies are based on actively crossing the spread and consuming liquidity.
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The main risk of the High Frequency Trading is [url=http://www.achbanker.com/hollister.php]hollister france[/url] the inventory management. Traders usually have large traders who have a significant size of the help move the risk. The ways this risk can be controlled is by keeping the net exposure low and diversify among [url=http://www.ilyav.com/uggsoldes.php]ugg pas cher[/url] various securities. Technology failure can also be managed by building redundancy systems. The HFTs are based on the [url=http://www.gotprintsigns.com/abercrombiepascher/‎]abercrombie soldes[/url] real time trading and are focused on the risk management. The challenge for any HFT is another HFT. The space for the entry of an HFT is very low and the cost for it is also not very high. The HFTs are low margin and high volume business. The [url=http://www.mnfruit.com/doudounemoncler.php]moncler[/url] profit per trade is low per share whereas for a long term investor the profits are greater per share. All said and done the future of the HFTs is said to be extremely bright.
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