The Speed Advantage

Sometimes faster isn’t better. However, in the case of high frequency trading (HFT), if I can buy and sell in 75-124 microseconds, while you cannot, I have advantage. In fact, in a zero latency world, those who can process information and make intelligent decisions faster than competitors have significant advantage.  This can’t miss 13 minute “60 Minutes” special on HFT will tell you all you need to know regarding how some companies are making instantaneous decisions and leaving others in the dust.

View CBS.com here

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3 comments

  1. Now that was a fast post. 🙂 Interesting video. Created a lot of questions in my mind.

    1. Once there were brokers with “faster” brains. They made a lot of money and big companies bought their brains to make even more money. Now they’re buying computers to do their job and mathematicians to program those computers? What’s new in the game? The faster and better gets more money. Isn’t that somehow america’s basics? I don’t like it, but it’s something everyone seems to belive in.

    2. The fun side: companies don’t know who owns them? Owners don’t know what they own? Smells like miliseconds communism, controlled by computers. Some people here might just love it. 🙂

    3. Isn’t there some hidden opportunity? Somewhere? Mathematicians and computers are not (as nothing else is) perfect. So there must be a big big opportunity nobody can see for now.

  2. Dusan, thank you for commenting on this quick column. I thought the HFT trading special was “special” enough to warrant mention, especially because it brings to life the concept of zero latency. We’ll see this concept increasingly in more industries in the near future. Now as to your point on hidden opportunities – one could buy options in the market based on the probability of a black swan hitting (another flash crash) and become very, very rich. Nassim Taleb did something similar when he made a mint on the 2008 financial crisis. Another crash will happen and methinks HFT will be the culprit!

  3. Video is excelent. And indeed, I can see it emerging elsewhere too. But in other industries, people will just not understand what happened. It’s like a tsunami. Everyone is seeing that ocean acts weird and noone is running!

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