High-Frequency Trading and Its Impact on Markets

Maureen O’Hara

Financial Analysts Journal, 2014, vol. 70, issue 3, 18-27

Abstract: At the 2013 CFA Institute Financial Analysts Seminar, held in Chicago on 22–25 July, Maureen O’Hara discussed a new market paradigm: Trading has become faster, and market structure has fundamentally changed. In today’s market, high-frequency traders (HFTs) act on information revealed by low-frequency traders (LFTs). To survive, LFTs must avoid being detected by predatory algorithms of HFTs. LFTs can thrive by adopting trading strategies appropriate to the high-frequency trading world. At the 2013 CFA Institute Financial Analysts Seminar, held in Chicago on 22–25 July, Maureen O’Hara discussed a new market paradigm: Trading has become faster, and market structure has fundamentally changed. In today’s market, high-frequency traders act on information revealed by low-frequency traders. To survive, low-frequency traders must avoid being detected by predatory algorithms of high-frequency traders by using small brokers.

Date: 2014
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DOI: 10.2469/faj.v70.n3.6

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