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FX HIGH-FREQUENCY TRADING it’s not the entirety of it.


Like innovators in any industry, HFT firms also seek smarter ways of doing things via technology. We throw around the word “disruptive” so often these days because the new normal is the 2.0 version of anything; once a technology or methodology exists, you can expect that someone is going to find a better way of doing it.


Instead of depending on speed exclusively, some firms are looking to other ways to trade – for example, building a trading strategy on clock sync technology, which synchronizes clocks around the world based on location to create an advantage.


cull all their own information, build their own microwave towers, run all their own network routes, etc., and smaller firms don’t have the ability to do that, so that means they can’t compete.


False. While this is true in some markets – no, a smaller firm is not


giving them boots on the ground in a market they don’t know themselves.


The idea that smaller firms can’t compete because they don’t have the money


to do everything


themselves is a myth; service providers have leveled the playing field in recent years, creating friendly competition and ensuring even small firms can play in the markets.


Moving Forward Instead of depending on speed


exclusively, HFT firms also seek smarter ways of doing things via technology


The future belongs to the disruptors (and the disruptors of those disruptors); it’s how we keep moving forward as a species. HFT firms are no different.


Myth No. 5: HFT firms do everything themselves


Many accept the idea that HFT firms often are in a position to


20 FX TRADER MAGAZINE April - June 2019


able to build their own shortwave radio towers between Chicago and London – it’s not true on a global scale.


Myth No. 3 touched on the idea of developing strategies for emerging and smaller markets and using service providers to allow smaller firms to compete. Here’s an open industry secret: HFT firms use these services as well, in emerging markets like Korea and Taiwan,


Te prevalence of these five myths points to a lack of understanding about many aspects of high-frequency trading practices and advantages, and it’s important to set the record straight.


Having a better grasp of how HFT firms operate – and the ways smaller firms can capitalize on their advantages to become fierce adversaries – will move the industry forward and fuel competition, keeping markets humming and making everyone a buck.


Jeff Mezger


Director of product management Transaction Network Services


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