High Frequency Trading – Challenges and Opportunities. write a paper of 2000 to 2500 words.

High Frequency Trading – Challenges and Opportunities. write a paper of 2000 to 2500 words.

Expert Solution

High-frequency securities trading utilises rules-based, high-speed strategies to perform multiple trades with all the decisions driven by computerised and quantitative models. Essentially, automated high-frequency trading is based on computer programs analysing the market situation and making decisions on the right time to buy, sell, or perform other financial activities. The idea is to predict the market's movements and take actions that deliver benefits if and when those predictions come true.

High-frequency trading encompasses a variety of specific approaches involving the following basic steps-

Obtain the market information.

Process the information through prediction algorithms.

Execute trades based on the information.

Fine tune the prediction based on how they performed.

The first three steps are transaction-intensive processes which requires online transaction processing (OLTP) technology. The last step is primarily an analytics-heavy process, requiring online analytical processing (OLAP) technology.

jeff jeffy answered 2 years ago

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