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  • Robinhood order flow income rose thanks to HFT firms

    Robinhood order flow income rose thanks to HFT firms

    2 min read

    Robinhood order flow income rose thanks to HFT firms
    It looks still strange to engage HFT firms in order to increase order flow income. The skepticism is great. Also the criticism.

    But the facts are that Robinhood’s order flow income rose 227% in 2018, thanks to HFT firms.

    And this is a standard offer among Wall Street brokers such as E*Trade or TD Ameritrade.

    What Robinhood did?

    It engaged HFT firms to increase order flow.

    Payment for order flow is still unknown and strange to the majority.

    And somehow they read that kind of market presence as the immoral.

    Traders Paradise wrote about HFT firms and strategies already.

    But, let’s see what Robinhood did.

    The popular millennial stock-trading app earned $69 million in order routing income in 2018. According to a survey from Alphacution Research, it three times more than the company made in 2017.

    Payment for order flow is a standard offer among Wall Street brokers.

    When employs HFT firm, the company is expecting more flow through its platform and it has it.

    Robinhood app is very popular among the millennials.

    The millennials like high-tech. And they will adopt any new product or gadget that can help them and make easier to buy anything.

    When we all adopted the internet, didn’t we have the same idea on our minds? To make communication easier, to provide ourselves better access to everything.

    So, where the problem is now?

    High-frequency trading is called ”dark-pool” because of the absence of regulation.

    Traditional traders are opponents. They say that these millisecond trades are against Wall Street and everything that is present on the markets for decades.

    Actually, it is not.

    High-frequency trading is based on traditional trading strategies. The main difference is the time of performance. The journey from the moment when trader see the opportunity and the moment the trader place the order is shorter. HFT algos will need millisecond while the traditional way would require much more.

    Yes, it is still unknown for the majority of how this HFTs work.

    Honestly, most of us will never reveal how the dishwasher works. But it isn’t the reason not to use it. Right?

    We have one simple question.

    Are high-frequency trading influenced based on who is paying the most?

    Opponents of HFT say that it can produce big market swings.

    Also, that HFT may result with an advantage for institutional investors.

    Yes, engaging some HFT firm will cost you money. But, as far as we remember, only very rich houses had a dishwasher when it entered the scene. Today, it is almost impossible to find a house without it.

    Even better, smaller retail investors may have benefits.

    How?

    HFT brings liquidity to the market.

    High-frequency trading grows the market intensity and liquidity and reduces volatility.

    And, there are also ordinances that require brokers to execute trades at the best price for the traders.

    Considering the Robinhood’s increasing in income, well we have to say it isn’t so big as some the opponents want to say.
    Also, HFT firms didn’t record such a big increase in order-routing income. For instance, TD Ameritrade had a 43% growth in this sector in one year.

    And one note for the opponents of HFT.

    HFT is not a trading strategy. It is the practice of advanced technology that plays traditional trading strategies. The particular trading strategies need to be evaluated rather than HFT as such.

    Hence, any strategy that has a conflicting influence on market integrity or enables market abuse, has to be are completely reviewed.

    And to quote our post HFT STRATEGIES – THE TIPS AND SECRETS: “Technology by itself is without morality. The people are those who can add it to high-tech.”

    Don’t waste your money!

    risk disclosure

  • HFT Strategies – The Tips and Secrets

    HFT Strategies – The Tips and Secrets

    3 min read

    HFT strategies - the tips and secrets
    HFT uses practically basic and simple strategies. High-frequency trading is not about implementing the strategy, it is all about speed of execution and flexibility.

    Well, the main strategy of HFT is to run faster than others. Of course, the principles of high-frequency trading (HFT) firms are secrecy, strategy, and speed.

    Algo trading is linked with the execution of trade orders. But HFT refers to the implementation of proprietary trading strategies.

    High-frequency trading consists of a variety of AT.

    Yes, both enable traders and investors to speed up the response on market data.

    The society of market participants using HFT is extremely mixed.

    There is a crowd of various organizations with various business forms that use HFT and there are many hybrid models.

    For example, some brokers and exchanges are utilizing HFT systems. So, in the estimation of HFT, it is essential to consider a practical perspective.

    It doesn’t matter if HFT is just an add-on technology to realize trading strategies.

    Liquidity providing is one of the HFT strategies.

    HFT strategies - the tips and secrets 1
    Well, the most frequent HFT strategies are to serve as a liquidity provider.

    How does HTF provide it?

    HFT liquidity providers have two primary reservoirs: when they provide markets with the liquidity they pocket the spread between the bid and ask limits. Also, there is a trading income by granting discounts or lowered transaction fees. The aim is to increase market quality and attractiveness.

    HFT firms will never discover their ways of acting. The significant experts linked with HFT are undercover. Well, this is not quite true. Maybe we could say they want to be in front of the public eyes less than others.

    Those firms operate with various strategies to trade and earn money. The strategies are often many kinds of arbitrage. For example, volatility arbitrage, or index arbitrage.

    HFT employs software that is incredibly fast. They have access to all market data and can make connections with minimum latency.

    HFT firms regularly use own money, own technology and a number of special strategies to produce profits.
    There are numerous strategies applied by traders to earn money for their firms.

    Even the controversial strategies.

    For example, HFT firms may trade from both parties.

    Hence, they can place orders to sell using a limit order above the market price. Also, they can place the buy order a little bit below the market price.

    And, voila! There is a profit for them. The difference between the two prices. They are market makers. All these transactions are very fast, in a millisecond by using algorithms and robust computers.

    Spread capturing as HFT strategy

    HFT strategies - the tips and secrets 2
    HFT firms are liquidity providers. They profit from the spread between the bid and ask prices.

    How?

    They are buying and selling securities all the time.

    With each trade, they receive the spread between the price at which shareholders buy contracts and the other at which they can sell contracts.

    Rebate driven strategies

    The liquidity provision strategies are developed on particular stimulus systems.

    In order to encourage liquidity providers, some trading venues use unsymmetric pricing. They charge a lower fee or give a rebate for market makers or passive trading.

    Why?

    Such traders bring liquidity to the market.

    On the other side, for more aggressive tradings they charge a higher fee. Why? Such traders remove liquidity from the market.

    An unsymmetric fee arrangement aims to boost liquidity provision.

    Point is: traders supplying liquidity earn their profits from the market spread. Fee discounts or rebates stimulate a market‘s liquidity.  

    On this way, those markets look promising comparing to their rivals.

    Arbitrage

    Chances to perform arbitrage strategies generally survive only for fractions of a second.

    But computers mission is to examine the markets in a millisecond. That feature causes the arbitrage to become the main strategy employed by HFTs.

    To conduct arbitrage HFT use the same method as traditional traders. But they use an algorithm to profit from short-lived differences between securities. The other types of arbitrage are not restricted to HFT and such, they are not the subject of this post.

    Latency arbitrage

    The latency arbitrage is the ability of HFTs to recognize new market information before other market participants even get it.

    The latency arbitrage uses direct data feeds and co-located servers to short the reaction time. Latency arbitrageurs profit from speed power. Such market participants can reduce the prices at which other traders are able to trade. That’s why you can find them under the name of predatory.

    Liquidity detection

    HFTs try to recognize the patterns other traders leave and adjust their actions accord to them. The focus of liquidity detectors is large orders.

    Liquidity detectors are getting information about algorithmic traders is usually called sniffing out the other algos.

    The bottom line

    HFT is not a trading strategy. It is the usage of advanced technology that performs traditional trading strategies. The individual trading strategies need to be assessed rather than HFT as such.

    HFT should never be banned. It would be contrary to market efficiency. High-frequency trading contributes to market liquidity and to the ability of the price creation.

    However, any strategies that have a contradictory influence on market integrity or enable market abuse, has to be are completely reviewed.

    This is particularly important for HFT. If anyone believes this technology promotes the implementation of abusing strategies, moreover, makes them more profitable and creates unfair circumstances on the market, should check the other participants too.

    Our confidence in technology is huge, but we are very cautious when it comes to the people.  

    Technology by itself is without morality. The people are those who can add it to high-tech.   

    Fortunately, we, ordinary people, don’t have any access to HFT.

    Don’t waste your money!

    risk disclosure

  • Where to Invest – Know How to Find

    Where to Invest – Know How to Find

    3 min read

    Where to Invest - Know How to Findby Gorica Gligorijevic

    OK, you think it is time to start investing! But before you dive into that world you have to know several things. Very important things.

    This article is not about where or how to invest. It is all about how to find what is necessary to do before you decide to invest and where to invest.

    We need to know more about how should we invest our money.

    Most of the time we do so without any research. That is completely wrong!

    Who even try to find some information about investing was overwhelmed by the tens of thousands of stocks, bonds, mutual funds, etc out there.

    You must be so scared of all the options. And you may give up.

    But keeping all your money in a savings account can take you on the wrong side.

    Nobody starts out as a specialist. Even the best investors were in your shoes.

    For the start, you must consider two questions.

    The first one is, where should you begin.

    And second, how to begin.

    First comes first.

    Where to begin.

    You may read different financial websites.

    As a financial site, Traders Paradise,  research all the time, collecting information from different sources. We have our tops, it is so natural.

    But we would like to share with you some free websites.

    The best-of-the-best that can provide you the education and news.

    We can tell you to read us, but you already do that, indeed.

    The best information about where to start investing we found on Cabot Wealth Network that includes a lot of free information. Their education section has valuable data about Stock Market Analysis, Market Timing, Selling Stocks, Technical Analysis and plenty of others.

    The site Investopedia is a very good source too.

    It is an invaluable source for definitions of financial terms. This site has tutorials and articles broken down for beginners. And all is free. Investopedia is a great site even for professional traders.

    Don’t give up when you see their long long sentences, they are hiding very valuable data inside.

    Among free websites, Traders Paradise highly recommends the Motley Fool. Don’t be foolish! Their name is just a good cover. These fellows are all market.

    They are excellent no matter if you are seeking to make your own analysis, or like the help of an experienced specialist. The Motley Fool is ready for you.

    Yes, you have to pay some of their services, but that could be a genuine opportunity for you, a beginner.
    Traders Paradise wants to recommend one site more. It is AAII Investor Classroom: www.aaii.com/classroom. But it isn’t free.

    It bears many lessons. They are treating everything from the risk management to the dividend stocks evaluation. The cost to join is $29 per year.

    If you want to start investing, you should analyze the characteristics of a company in order to evaluate its value.

    Where to Invest - Know How to Find 1
    That is security analysis. You have to check a company’s financial documents and financial circumstance, its management, and rival advantage. Of course, you would like to identify its rivals and markets.
    Why is this important?

    The technical analysis finds that all the major parts of a business are reflected in the price of the stock. Technical analysis examines the market supply and demand.  It is an effort to recognize where a stock’s price will go in the future.

    Amongst sites needing paid subscriptions, we recommend Investor’s Business Daily eTables, Zacks, and

    American Association of Individual Investors (AAII). They are really helpful.

    For example, Zack’s does expect membership. If you want to get to the spicy material.

    Well, surprise, surprise!

    The membership is free. You can devote three minutes to sign up. You will have an in-depth review of both stocks and funds. Moreover, you will have access to many free reports that will help you.

    And you have to read books.

    Where to Invest - Know How to Find 2
    There are thousands of various books about investing. One of them is everlasting and evergreen “The Intelligent Investor” by Benjamin Graham.  

    You can find a lot of respective books out there. You can adopt the main ideas from these books because they touch any market over the globe. Well you know,  many questions are the same to all worldwide investment. The macroeconomic indicators, asset allocations, and currency risks are the same all over the world.

    Investors are overwhelmed with information. Everything is trying to catch your attention. From press releases to SEC filings, for example. Yes, it’s always helpful to be informed.  But how to isolate the good information from the uproar.

    Press releases usually neglect bad information. They are adjusted on the good news. Analysts have spectacularly prejudices. At the same time, the official statements are tricky to be used, actually, they are not useful because of their vocabulary.

    So, where to look for information before you start investing?

    Corporate websites include information about a company. From financial statements to annual reports and surveys.

    When you are seeking the financial information they can be easier to navigate.

    What you have to look for?

    First of all, financial statements.

    Of course, you would like to take a look company’s presentation. Remember, never neglect this.
    Company presentations can give you an important summary of the past result. Also, the predictions for the following years.

    Company press releases can hold a treasure of information about progress and financial fulfillment.
    Find their investor contacts. They can be an important source for investors. But always keep in your mind who is paying them.

    Securities analysts can be an excellent reservoir of information for investors. Buy-side analysts are a better reservoir because they are not so biased. Analyst reports can be found in places including:

    You can find analysts reports among stockbrokers.

    Also, among companies.

    Some companies offer analyst research to potential investors.

    Find some broker with the fiduciary obligation.

    A fiduciary relationship is where one person (fiduciary) undertakes to act for another, placing his or her interests ahead of their own.

    We will give you a quote from the legislative site:

    “Fiduciary obligations refer to the duty to avoid conflict, the duty to not make a profit, and the duty not to gain a personal benefit or a benefit for a third party, without the consent of the principal.”

    But most of the necessary things you have to do by yourself.

    You have to examine your needs and goals.

    It’s worth to think about what you actually desire from your investments. Take your time. If you know your goals, your risk tolerance, you are on a good path.

    Estimate how long you can invest.

    Consider about how quickly you need to get your money back.

    Or just let a robo-advisor invest your money for you.

    Don’t waste your money!
    risk disclosure



  • Trading Forex at the Weekend Gaps

    Trading Forex at the Weekend Gaps

    3 min read

    Trading Forex at the weekend gaps is a growing field of investment. Forex weekend trading hours have extended away the traditional trading week.

    Forex trading the weekend gaps are becoming popular because of trader’s expecting Sunday’s opening price to return to Friday’s closing price.

    There is a mistake that you can’t trade over the weekends.

    So,  you surely can trade online at the weekend. To be honest, weekend trading in currency, stocks, CFDs, and futures is increasing fast.

    Actually, the forex market is opened during the weekend.

    How Trading Forex at the weekend gaps is possible if we know that the forex market is working 24/5?

    Well, it is decentralized. And technically the forex market is open 24/7. It is true that the majority of dealers close transactions on the weekend. For retail traders close at around 5 p.m. EST on Friday and open around 5 p.m. EST on Sunday.

    And we can see a gap during the forex open time only when the price movement is great because of some news.

    But gaps are quite obvious in the forex market when the market is closed over weekends.

    How does it come?

    The market prices are moving over the weekend. You can not stop the currency transaction. For retail traders, the price isn’t the same on Friday when the market closes trades and on a Sunday afternoon when it opens.  

    If the price is higher on Sunday, we have a gap up. But we will have a gap down if it opens lower than the Friday afternoon price.

    Trading Forex at the weekend gaps is very familiar to forex traders. It is a very often use strategy. Why is that?

    Well, the Forex market is, in fact, open 24/7. Yes, trading ends on Friday and can be opened on Sunday evening.

    But so many things can influence the currency price movement over the weekend. So, when traders are trading at weekend gaps, they are expecting the opening price will hit the closing price.

    The gap traders believe that the price will continually fulfill the gap. Really? In fact, it constantly does. But it isn’t feasible always.

    That’s why some traders make losses. Some gaps are tradable some are not.

    For example, we recognize four varieties of gaps.

    Breakaway gap

    The breakaway gap regularly rises a new trend.

    The price frequently develops out of the consolidation phase. Moves up or down with powerful momentum. What leave behind is the gap.  

    Some crucial, breaking events may cause movement. That new trend isn’t always tradable. Breakaway gaps happen at the end of the price pattern. They indicate that the new trend is starting.

    Trading Forex at the Weekend GapsThe breakaway gap

    Exhaustion gap

    Exhaustion gap occurs close to the end of a price pattern. It indicates a definitive try to reach new highs or lows. Usually, it comes after a sudden move. It has an unnatural rise in volume and then turns strongly. Also, you have to know that it comes after some news or reports. For example, after the earnings announcement. That is the period when trading activity increase. Traders are closing their big positions. That causes an obvious reversal. You can find the exhaustion gaps no matter if it is an up or down trend.

    Trading Forex at the Weekend Gaps 1The exhaustion gap

    Common gap

    It simply represents a space where the price shows a gap.

    They are gaps seen on a price chart and they are very common and the most generally traded.

    Also, they regularly arrive late Sunday and early Monday market openings.

    They are suitable for short-term intra-day trading. You should look for a common gap around Sunday midnight and trade those Forex gaps at that time.

    Trading Forex at the Weekend Gaps 2The Common gap

    Runaway gap

    Runaway gaps mark trend continuing. A runaway gap is fairly one of the most secure ways to trade. Particularly if you combine them with other price tools.  

    A runaway gap happens when the price is gapping into the course of the trend. When the trend is strong you may see them.
    Runaway gaps regularly work inside a trend.

    Traders need to recognize the gap before they find the potential increase in price. This means that runaway gaps are traded after the action.

    The bottom line

    The gaps can give a lot of news about market moving.

    Trading at the weekend gaps is risky.

    But you can use the information produced by a price gap to develop a complex trading plan. It can be helpful with other trading ideas.

     risk disclosure

  • High-frequency Trading Algorithms Characteristics

    High-frequency Trading Algorithms Characteristics

    High-frequency Trading Algorithms CharacteristicsHigh-frequency trading algorithms or algos are rigidly secured by their owners.

    By Guy Avtalyon

    High-frequency trading algorithms can be amazingly easy to use. And beneficial too. Where is the catch?

    By their nature, because they are so fast, those algos know the future price, they don’t even have an attempt to predict them. The slower shareholders need to predict prices, algos don’t.  High-frequency trading algorithms use arbitrage, traditional technical analysis, and everything that works. Their purpose is to implement and modify well-known strategies while running with their extraordinary speedy setup.

    The High-frequency trading algorithms main advantage is getting price quotes earlier and placing orders faster than the bulk of other traders.

    Of course, the profit may depend on the software’s latency. Or it can be some lag between the price quote and following order execution. Latency is the most important part of an HFT algorithm.

    High-frequency traders can optimize latency in two ways: if you minimize the time to reach the exchange or if you maximize the speed of your trading system.

    Traders use algorithms for trading to reach higher performance to markets.

    Algorithmic trading is like traditional trading.

    You want to buy or sell the security. The whole process is based on the predefined collection of rules examined on past data.

    That means every HFT algorithm use indicators, charts, technical analysis, etc.

    HFT firms decrease latency by fastening direct market access.

    As an HFT trader, you can get data from the market nonstop, and without third-party. The direct market access gives you the capability to enter market orders straight into the market’s order book. This is an important feature of a low latency trading platform.

    That guarantees that you will receive data before then other traders that are not using direct market access. So, you will be able to participate in the marketplace before the competitors.

    HFT methods gain an advantage via ultra-low latency

    It is possible through the establishment of two important inputs:

    Automated trading algorithms

    It is known as “black box” trading systems. Actually, it employs multiple algorithms based on various market variables. It provides a trader to get trading signals and identify a possible trading chance. That signal is traded automatically by installed trading software.

    Collocated servers

    These servers are given to the trader and connected to the market or exchange. They are actually placed at the exchange or market. The advantage of collocated servers is that they give you direct market access with hugely decreased latency. That’s why they are better than remote servers.

    The main task of a good HFT algorithm is to reduce the time of traders’ access to the market.

    The use of the HF trading algorithm altogether with collocated servers guarantees an exact and up-to-date synergy with the market.  Complex algorithms identify and execute trades build on strategies. These strategies are known as order anticipation, arbitrage opportunities, momentum.

    So, is it possible to compete with algorithmic trading?

    Well, we have to say it isn’t. Don’t try to beat a High-Frequency trader! You will lose that match. The HFT has plentiful supplies and is be able to keep the algo running 24/7. Can you keep alert all that time? Can you be functional and reliably?

    HFT includes multiple sub-disciplines.

    They are quantitative techniques with short time holdings.

    It is established on technical and fundamental analysis. Yes, they use traditional patterns to make trades. They are a very fast variant of what traders have done for a long time before. Also, HFT includes algorithms to prognosticate hudge buying or selling patterns. They use high-speed connections and co-located servers or in-house exchanges. And in a millisecond places trades based on those forecasts. They know what the next will happen!

    The simplest algorithm is based on technological and geographic recognition.

    Remember, the length of the optical connections is very important. The HFT algorithms can evaluate the order attributes, and discover if it is an indicator that related orders will go to other markets.

    And what will happen? The High-frequency trading algorithms will place the order to buy at the offer price at the other exchanges. 

    High-frequency trading algorithms will always take advantage of the speed of execution.

    HFT knows how to force the price to a higher level. It will buy all the stocks first and push the price to grow. And?

    So, if some trader places the order with the limit order on that or higher price the algo will be the winner. It will use the spread.
    Because of its dominance in the rapidity of execution.on technical and fundamental analysis. Yes, they use traditional patterns to make trades. They are a very fast variant of what traders have done for a long time before. Also, HFT includes algorithms to prognosticate hudge buying or selling patterns. They use high-speed connections and co-located servers or in-house exchanges. And in a millisecond places trades based on those forecasts. They know what the next will happen!

    The simplest algorithm is based on technological and geographic recognition.

    Remember, the length of the optical connections is very important. The HFT algorithms can evaluate the order attributes, and discover if it is an indicator that related orders will go to other markets.

    And what will happen? The High-frequency trading algorithms will place the order to buy at the offer price at the other exchanges.

    HFT algorithm will always take advantage of the speed of execution.

    HFT knows how to force the price to a higher level. It will buy all the stocks first and push the price to grow. And?

    So, if some trader places the order with the limit order on that or higher price the algo will be the winner. It will use the spread.
    Because of its dominance in the rapidity of execution.

  • Order Flow Trading

    Order Flow Trading

    3 min read

    Order Flow TradingOrder flow or transaction flow

    Order flow trading is more of a mindset. We cannot say it is a trading system or trading method. It is all about how some traders are viewing and imagining the market place.

    Say in this way, the orders are moving price.

    So, the intent of an order flow trader is to identify patterns on which they are getting triggered.

    It is also called a transaction flow. 

    Order flow happens when a trader believes the price of an asset will move and then the trader chooses to execute the order.

    Also, order flow trading is an expression that generates a lot of mess.

    Some traders believe that such trade is based on very secret information from the banks. That just a small group of people have knowledge about it.

    But you can see that some of them believe that it is another kind of price performance.

    To determine order flow trading you have to clarify what kind of trading you want to execute.

    Many of the retail forex traders are trying to place directional bets.

    That is when the trader is going long or short, speculating that prices will go up or falling.

    For example,  if a trader believes a currency pair will move up, he/she will set a buy order. But if such a trader prediction is a currency pair will go down, he/she will go short, meaning the trader will sell. This is directional trading.

    It is one of the most traditional styles of trading.

    If you choose directional trading, you may decide to be a dynamic trader. You want, for example, to execute a market order and pay the spread. That is one possible choice.

    The other alternative is to set a limit order or stop order marking the order flow to be executed at a specific price or executed after the market hits a specific price.

    This is different sorts of order flow.

    Order Flow Trading 1Order flow trading is alike to price action trading

    The trader who executes a market order is achieving a more dynamic order. Such doesn’t like to wait for a limit order.

    It is questionable if that order will or will not be filled.

    But the trader who set a limit order or stop-loss order is creating a more inactive kind of order flow. Even if the orders are not executed, they are helpful in building the order flow.

    Order flow trading is alike to price action trading.

    They both intend analyzing the market in a specific style.

    Price action traders try to conclude which direction the market going to move in. Order flow traders think they can foretell the same thing but based on capturing the actions the other traders done in the market.

    Order flow trading, so how does it work?

    The basic idea lays behind that if you are able to recognize when and where traders are going to make decisions, you can presume what is the future course of the market. The main purpose is to determine when the prices are moving up or down.

    To be more clear, one trade will never cause such movement.

    But thousands of orders appearing at the same time can generate the price’s turn.

    And we can say that the main intent of order flow traders is to find how other traders trade. On that way, such a trader can recognize when numerous orders will appear to the market, large enough to generate a price movement, either up or down.
    All the trader needs to know is what is the basic goal of their trading method. Based on that knowledge, he/she can predict on which position they will make a decision which will place orders into the market.

    The basics of order flow trading

    Order Flow Trading 2Two types of order flow trading

    There are two main types of orders that traders can execute in the market.

    Each of them is executed for different reasons. Hence, have different influences on the market price after execution.

    The traders can place market orders or limit orders.

    One group will place a market order because they want to earn money as quickly as it is possible.

    They place a market order to open their trade because they don’t want to miss such a great chance. This is so-called reactive strategies. Meaning, the traders are reacting on what is happening in the market at this moment.

    When a trader places a limit order, that means that trader wants to have a trade at a price which he expects will be reached in the market.

    Stop losses are also limit orders because they provide trader to buy or sell at a price which has to be reached in the future.  
    Both affect the market price but in different ways.

    A market order spends some of the liquidity in the market. On the other side, the limit order is placed to add liquidity to the market.

    And, here we are!

    The keyword for order flow trading is liquidity.

    Liquidity explains how accessible is it to buy or sell in the market.

    When it is easy to sell or buy, the market is liquid.

    For example, the forex market is one of the most liquid financial markets in the world.

    Buying or selling on the forex market is so easy because you will always find who is going to sell to you or to buy from you.
    Why is this so important for order flow trading?

    When low liquidity occurs that means that most of the orders on the market are buy orders. The traders can’t achieve buy trades placed because there are not enough people in the market ready to sell.

    There have to be a big amount of sell orders placing the market in order for the market to be liquid.

    It is really important to learn that when low liquidity is approaching the end, it means the traders have made the decision in the market.

    But which decision?

    That depends on which course the low liquidity movement happened. If it was a drop-down then the traders have placed buy trades or carried profits off sell trades which have previously been placed.

    If it was an up-move, traders placed sell trades or took profits off buy trades.

    Price does not move because of some mysterious technical indicator. Nor moving average will move the price.

    For the price to move, traders need to execute enough orders to utilize the liquidity at the best bid/offer.

    If there are no orders to be executed, the price will not move.

    This is the cruel truth in trading.

    The market will never move to your direction if there is no order flow.

    The outcome of the trade is managed by the performance of other traders. The real transaction and order flow are produced by other traders.

    The bottom line

    Order flow trading is not a technical analysis or fundamental analysis. They are not able to move the market.

    Order flow and liquidity is the base of the market.

    That’s why many traders have gained the losing tradings. Their losses happen because the technical or fundamental analysis cannot produce enough order flow to move price in your favor.  

    Order flow trading tries to improve the lacks in technical and fundamental analysis.

    When you learn and practice enough, you will find this is the most successful approach to trade.

    Don’t waste your money!

    risk disclosure

  • HFT firms that need new employees

    HFT firms that need new employees

    3 min read

    HFT firms that need new employees
    Numerous HFT firms are actually small companies with a small number of employees. If you want to be one of them, you will need to show a capacity to produce income bigger than your salary plus bonus share. You have to be fantastic and have unique skills.

    If your knowledge is really excellent, there are no barriers to enter some HFT firm even if the firm might not be hiring right now.
    Yes, you would be asked to work almost 70 hours per week when it is necessary but the salary and intellectually provocative environment will cover your engagement.

    There are a few roads into HFT. Any of them you chose you MUST have a great knowledge of math, computer sciences, physics or related technical focus.

    Traders Paradise wants to represent you some of the HFT firms that are looking for new workers.

    Liquidnet

    The position required: Liquidnet is looking for Junior Data Scientist/Quant Developer.
    Skills required:

    • Bachelor’s degree in Computer Science, Mathematics or similar technical field.
    • 2+ years of relevant experience OR recent Masters or Ph.D. grad in Computer Science, Mathematics
    • Knowledge in a mainstream programming language, such as Python, C/C++, C#, Java, JavaScript, Haskell

    FIND MORE about this job HERE
    Specialty: It is a world known institutional investment network which connects asset managers with liquidity.

    Company Overview: Its headquarter is in New York City but has departments in  San Francisco, Boston, London, Dublin, Sydney, Toronto, Hong Kong, Singapore, and Tokyo. This trading network is connecting asset managers to pools of liquidity for both equities and fixed income. Last year it was recognized as 8 out of 34 large organizations category in New York City. That means it is one of the best employers in New York City.

    Salary for this position per year: $110k – $159k 

    Old Mission Capital

    The position required: Quant Trader.
    Skills required:

    • Candidates must be proficient coding with one of the following languages: Python, Java, C++, VBA, R, Matlab, Ruby.
    • 4-10 years of relevant trading and research experience, with a primary focus on global equities, commodities, or fixed income instruments and/or related derivatives
    • Experience with systematic market-neutral strategies over a range of holding periods/forecast horizons (short, medium, and long).

    FIND MORE about this job HERE
    Specialty: They have high performance automated trading system that operates globally. Old Mission Capital trade equities, currencies, commodities, bonds, options, futures and other derivatives.

    Company Overview: Old Mission Capital, LLC provides brokerage and trading services. That include a model for security valuation, trading algorithms, tools for risk management. Old Mission Capital was founded in 2008 and it is headquartered in Chicago, Illinois. Old Mission Capital, LLC works as a branch of Old Mission Holdings, LLC.

    Salary for this position per year: $7k – $8k per month 

    NJF Global Holdings

    The position required: Junior Quant Trader
    Skills required:

    • Quantitative background
    • experience with a programming language Python/C++ a plus but not required
    • Ability to collaborate on projects with others but also work independently when needed

    FIND MORE about this job HERE
    Specialty: The company provides finance, technology, legal, and financial research services.

    Company Overview: NJF Global Holdings Ltd was previously recognized as NJF Search International Ltd and modified its name to NJF Global Holdings Ltd in August 2013. The company was founded in 2003 and is based in London, United Kingdom.  It has offices in New York and Chicago.

    Salary for this position per year: unknown

     Milliman

    The position required: Quantitative Analyst to work in the Portfolio Management Group in an entry-level role
    Skills required:

    • Strong Excel/VBA and PowerPoint skills
    • coding skills, especially C# (or other Object Oriented languages) and SQL (or other database management tools)
    • experience working with Bloomberg or Morningstar

    FIND MORE about this job HERE
    Specialty: Retirement funding and healthcare financing, risk management and regulatory compliance, data analytics and business transformation

    Company Overview: Milliman Financial Risk Management LLC is a market leader in the field of portfolio management and risk management. Their focus is on trading securities and derivatives to manage capital market risks for banks, asset managers, insurance companies, and pension plans. The Portfolio Management Group, located in Chicago currently implements risk management overlay strategies on over $50 billion in assets.

    Salary for this position per year: $45k – $82k

     The Princeton Group

    The position required: Quant Developer
    Skills required:

    • Advanced programming knowledge of at least 3 programming

    languages, including Python

    • Strong understanding of statistical and Machine-Learning methods
    • experience with Tensorflow and Keras, React.js and HTML data visualization libraries

    FIND MORE about this job HERE
    Specialty: Technology professionals proficient in developing computing solutions and skilled in complex business activities such as trading and trading tools technology

    Company Overview: Specializing in IT placement services for Startup, Fintech and Hedge Funds. IT staffing and recruiting in New York and New Jersey. Financial modeling, quantitative analysis, and development buy and hold strategies, the generation of portfolio accounting tools and report generation.

    Business initiatives including risk, trade processing, trading and the development of trading instruments.

    Salary for this position per year: flexible from $24 – $27 per hour

    General skills to get a job at HFT firm

    The positions at an HFT firm are pretty different. Almost everyone must have extremely technical experience and knowledge.
    HFT is typically a technology field, so if you want to work there you must have an excellent background in programming or electronic engineering. Some of them will require deep knowledge of hardware, for example, GPU or FPGA.     

    Actually, every skill that can reduce the latency and improve the execution speed of algorithmic calculations will be required in HFT.

    Widespread knowledge of trading exchange is a general skill for any high-frequency trader.

    HFT requires large dimensions of estimates in a very short time frame. So, the advantage is to know how to increase the speed of execution.

    Also,  deep knowledge of hardware design such as GPU and FPGA is an advantage. A lot of HFT firms will require a background in Linux kernel modification.

    Background in Linux kernel modification is beneficial to many HFT firms.

    The bottom line

    The top HFT firms are usually placed in New York and London. Chicago is also a large hub for HFT.

    But it is very rare to find a job in those HFT firms directly. They are doing that via recruiters.

    The direct application to HFT firms is possible, yes!

    But the tricky element is estimating which firms are actually in HFT.

    The best way is to join some recruiter.

    Traders Paradise offers you several and we will continue doing that.

    Stay tuned!

    Don’t waste your money!

    risk disclosure

  • High – Frequency Trading (HFT) – Why to Use

    High – Frequency Trading (HFT) – Why to Use

    High - Frequency Trading (HFT) - Why to UseThe high-frequency trading algorithm or HFT provides fast and profitable trades. Learn how.

    By Guy Avtalyon

    The high-frequency trading algorithm or HFT is one of the two main types of algorithms. The other is the execution algorithm.
    HFT trading means to engage multiple algorithms in order to examine various markets. The orders execution is based on market conditions.

    It is a program trading platform that utilizes robust processors to conduct a large number of orders very fast. Actually, the whole operation takes less than one second.

    And it is a very important feature for traders.

    The speed of trade execution will decide if you are a profitable trader or you are not. The logic behind this is that HFT provides you a fantastic speed in trading. So, you can gain your targeted price faster than, let’s say, ancient trader, is going to do.

    The advantage of high-frequency trading is that it provides you a permanent view on markets condition because it follows market data in real-time.

    Is a High-frequency trading set in today’s markets?

    But there are some misunderstandings yet.

    HFT is very often a cause of disagreement among traders. The traditional traders don’t like algo trading at all.
    Yes, we understand why is that.

    HFT leads to some effects, very unknown to some market experts. Their opinion about the algo trading is the same.
    First of all HFT trading provides traders more advantages in the main processes.

    HFT applications can hit even a very small profit from huge numbers of executions. You must know that there are a million executions every single day in the markets all over the world.

    High-frequency trading will never hold the position for a long time.

    The old-fashioned traders say it can cause great volatility and results with losses when it goes wrong.

    Well, their opinion is not quite mistaken.
    Let’s say it is possible. And we will recall the year 2012 when really was tricky.  

    HFTs caused the knockdown to Knight Capital Group. After that accident, in many countries, HFT was reduced. For example, Italy has the rule to tax 0.02% on the transaction that takes less than 0.05 seconds. The rule was launched in September 2013.
    The other problem with HFT is there is no generally recognized definition. So, that can open the space for some confusion.

    The truth is that the digital era requires digital work for which we need digital equipment. This digital tool leads us to speed business and the trader’s business is to execute their trades fastest as it is possible. But the principle is the same as centuries before: when you are in the market, you would like to buy or to sell. And HFT provides traders to do it. Fast, very fast.
    Let’s break down HFT trading.

    What is high-frequency trading?

    The high-frequency trading is called ”black box” trading.

    It indicates to automated systems that regularly use complicated algorithms to buy and sell securities. Extremely fast!
    In the same manner, the algorithms do it at a much larger range than any individual is able to do.

    Previously we said that HFT provides a very small profit from huge numbers of executions, but thanks to the high speed and large volume they produce great returns to traders.

    How does it work?

    The algorithm follows a “quote level” that is created including bid and ask. In volatile markets, the quote level can be changed in a second. Honestly,  it could happen several times in a very short frame time.

    And the algorithm is going to do what? It will place your trade in the right direction and faster than you can do it by yourself.
    Without the algorithm, you will not be able to recognize all the opportunities. You might miss something extremely significant.
    Yes, you can tell how and when your trades should go, but even you are fast-acting on your mouse or mobile interface, it will take time.

    Moreover, the algorithm will buy and sell the same stock multiple times in a brief period of time. This means the algorithm will trade several hundred times in a single day.

    Yeah, here is some problem with that. Say, you are paying $1 commission. WOW! Be careful with your HF trading! But returns you can gain are bigger.

    Remember, you are using artificial intelligence.

    You have to know that 75% of US stock trades are placed by algorithms. This number will expand soon and it will continue.
    Why we are so sure of that?

    We people, humans, will never have such ability to process that volume of data, we will never have the possibility to estimate all information required to make a trade before our rivals. Sometime we will do that, but most of the time we will not. And to make a good decision we need time.

    Algorithms are able to operate with a million bits of data in one millisecond, at the same time they are able to make decisions and act.

    All alone! Of course, when you turn it on.

    So, why to use High-frequency trading (HFT)?

    High-frequency trading demands the lowest latency in order to keep a speed advantage over the retail traders. Complex algorithms are at the core of these programs. The algorithms give directions for acting to market circumstances based on highly automatic signals.

    Behind these programs lays very complicated coding. Millions, even billions of lines of code. Some of the biggest HFT companies have a continual profit during 1,000 trading days without a single loss.

    The speed, access, capital, and no holding time make advantages. And risk-averse and latency too. Latency is the time it takes for data to reach its endpoints. When latency is low that means higher speed.

    HFT has led to tighter bid-ask spreads.

    It makes transaction costs lower. The liquidity increased and pricing efficiency is raised. The main concerns about HFT are the ability to accent and stimulate market changes.

    For example, there is some risk with some out-of-control algorithm. Also, there are traders who can manipulate the market because they are scammers familiar with programming. That’s why every trader who wants to employ HFT has to be very careful when downloading such apps.

    Happy trading!

     

  • Pinterest is Pinning for IPO

    Pinterest is Pinning for IPO

    2 min read

    Pinterest is Pinning for IPOPinterest wants to go public

    Pinterest could be going public in early 2019 probably to the end of April.

    According to an article from the Wall Street Journal, Pinterest, the social media for image discovery and sharing, is almost ready for an IPO.

    It has a very extensive service but still, it is a profitless company. The question arises here, can such a company provoke the investors to invest in it. Is there, in the market, the demand for companies like this?

    Anyway, Pinterest is approaching to the stock market with big strides. It has set a price span for the opening public offering below private-market peg of $12 billion. That is less than any current private estimates of the company. That means Pinterest shares could be priced at between $15 and $17 when it goes public. The Pinterest stock ticker on the NYSE should be, according to their expectation, PINS.

    Pinterest, in late March, published an offering to latent investors. The document showed very interesting data. This company had about $756 million in income from online advertisements in 2018. Their income growth rate in 2018 was increased, which raised for 60% year on year. The main trump card in their hands is the fact that over 256 million people and 1.5 million companies use the Pinterest platform at least once per month.

    Pinterest’s price range discourages some investors because of the overflow of tech IPOs this year.

    All of us can witness about Lyft struggle on the market and sharks they met there. Well, the Lyft is an unprofitable company, that’s, true. But their shares fell below the offering price after only two days trading in the market.

    “People are looking at Lyft and realizing that even if the roadshow goes extremely well and there is a lot of demand, you can’t overprice the offering,” said Elliot Lutzker, corporate and securities partner at Davidoff Hutcher & Citron for the NYT.

    And the main game will come soon as the Uber, the largest of these contemporaries of tech start-ups, also has plans to run public in the next few months.

    Their estimated value is about $120 billion. Uber can easily be the biggest IPO by some US company.
    So, it can be very tricky for both Pinterest and Lyft to manage their public appearance with Uber included as competition.

    It is obvious that Pinterest is trying its show on the road. Their plan is to make the institutional investors more interested before the first day of trading and final IPO pricing.

    If investors respond with high demand in the following days, Pinterest’s shares price could increase in value.
    The other important fact when valuing Pinterest is that it has $628 million in cash on its balance sheet.

    But there is also another count behind. The private investors

    In total, private investors have put almost $1.5 billion behind Pinterest. If Pinterest’s shares go between $15 an $17 (Pinterest plans to sell 86.3 million shares at an initial offering, which is $12 billion valuations).

    The company’s initial investors will still have huge earnings.

    The Pinterest biggest shareholders are Bessemer Venture Partners, Andreessen Horowitz, FirstMark Capital. According to NYT, they don’t have to be worried about IPO price range: Bessemer will be good at $952 million, FirstMark Capital would deserve $710, and Andreessen Horowitz will be good at $696.

    Pinterest’s IPO really may be an examination of how much it can interest investors who are seeking fast-growing companies. Would they want to buy shares of the company with just 60% of growth in one year?

    Well, anyway we will see very soon if murmur can beat the quality. There is a big hype surrounding Pinterest, and other tech unicorns and decacorns this year.

    Don’t waste your money!

    risk disclosure

  • Forex Trading in the Indian Market is Not Fully Legal

    Forex Trading in the Indian Market is Not Fully Legal

    Forex Trading in the Indian market is Not Fully LegalIndian Forex market is not fully legal

    By Guy Avtalyon

    Forex trading in the Indian market is legal. RBI puts a lot of restrictions on trading, but still, there are possibilities for Indian residents to participate in the Forex market.

    So, we can say, it is allowed to trade Forex inside Indian Exchanges. All resident Indian or companies, banks, and other financial organizations can trade in the currency market.

    But Foreign Institutional Investors and Non-Resident Indians are not allowed to trade in the currency market. So, once again if you are resident Indian, you can trade currency over Indian exchanges like NSE, BSE, or MCX-SX. The main currency pairs are USDINR, EURINR, GBPINR, and JPYINR.

    The point is that you can trade with respect to those two conditions: being resident Indian and the broker you choose is in the club of the exchanges mentioned above.

    In those cases, Forex trading in India is unquestionably legal.

    Forex trading in India is legal and safe.

    There is remarkably strong regulation established by the RBI concerning Forex trading.

    The problem is that RBIs regulation allows you to trade only 4 currency pairs, USD/INR, EUR/INR, GBP/INR, and JPY/INR.
    But, it is possible to trade.

    Yes, you cannot open an account out of the country, you have to trade with registered Indian brokers and listed currency pairs.
    So, take this suggestion! If you are resident Indian and want to neglect the laws, you can also open an account using offshore exchanges. But you are doing that at your own risk.

    Converting the INR to other currencies for the purpose of trading the FX markets with abroad Forex brokers is an illegitimate project. Such action in India is strictly against the law and can bring draconian penalties and also the prison.

    How to do a Forex trading as an Indian trader

    This is where things are a bit tricky. If you live in the rest of the globe, trading forex is the normal and regular thing.

    For example, if you are a resident of some EU country or you live in the US, you can trade any currency pair in the world. You can trade even over unregulated brokers, at your risk of course. But when you trade on Forex market that is pretty unregulated you are trading at your risk anyway.

    When it occurs in India, it is quite complex.

    Is Forex trading fully legal in India

    The problem is that trading currencies in Forex trading in the Indian market is not fully legal.

    You have only one possibility, and it is the same for the resident Indian, you can trade only the currency pairs that have INR (Indian Rupee). And you may choose among 4 currency pairs USD/INR, EUR/INR, GBP/INR, and JPY/INR.

    What is the story behind this? We assume one possible scenario. The US dollar is the most popular and the most traded currency.

    And INRs value in comparison with the US dollar is too low. So, if many traders would like to buy dollars, the Central Bank of India could be short. The next what the Central Bank of India could do is to buy dollars. But the price would not be the same. It could be much much higher. It is possible at worse rates and INR will continue going down.

    That sounds logical.

    In the same way, online trading and using online platforms are not allowed for Indian citizens. Foreign brokers can offer their services in Forex trading in the Indian market. Though, Indian traders can trade only with brokers certified by SEBI. And again, they can trade only currency pairs denominated in INR.

    This the moment when we have to say that it would be smart to reconsider those limits. In such a case, Indian Forex traders could enjoy full currency trading.

    As we heard and read several times, the Indian government is contemplating eliminating the restrictions in order to provide the other popular pairs to be traded. That will be nice.

    Until then, if you want to trade with abroad brokers, you should be sure that they have the required licenses.

    Our recommendation is to choose the approved Forex broker that has an extraordinary credit. It isn’t hard to find some, for example, TradeO.

    Trading Platforms for Forex trading in the Indian market

    For Indian traders, it is impossible to use online Forex platforms or software. Simply, it is illegal.  

    But still, not all Indian traders are citizens of India, so they can use them.

    For those who can trade online from India, there are few things to consider.

    Choose the broker with a user-friendly interface.

    Also, it has to easy to manipulate.

    The button that can close all of your positions when you want that has to be included and visible.

    Further, your broker must offer you several platforms. One, for example, Metatrader 4 or Metatrader 5, that you can download and at least one to trade from your browser.

    The most convenient is if you choose the broker that provides you to download the app. You can easily install it on your phone.

    So, you don’t have to be stick to one place when you want to trade.  

    When it comes to account types, the majority of brokers will allow you to open the account with a small deposit. It can be, for example,  $50-$100.

    But maybe you want to trade with a much bigger amount of money. Anyway, you should contact your chosen broker and discuss the rules, and find out which type of account suits you best.

    Also, you should check if your broker has a free demo account. Either you are an advanced or beginner trader. Trading on a free demo account will give you the view of how the platform works, or you can learn more before you give them your money.
    Happy trading, India!