• Latest
  • All
  • News
  • Business

5 Tips to Avoid Front Running by High Frequency Traders HFTs

Aug 14, 2018
A Beginner’s Guide on How to Start Webinars

A Beginner’s Guide on How to Start Webinars

May 20, 2022
What Is a PDF Virus?

What Is a PDF Virus?

May 17, 2022
The Ultimate Guide to TV Antenna Installation

The Ultimate Guide to TV Antenna Installation

May 17, 2022
How to create multiple email filters in ProtonMail free plan

How to create multiple email filters in ProtonMail free plan

May 14, 2022
6 Benefits of Outsourcing Your Business’s Design and Development Projects

6 Benefits of Outsourcing Your Business’s Design and Development Projects

May 13, 2022
How IoT, Autonomous Cars and Smart Cities Will Develop

How IoT, Autonomous Cars and Smart Cities Will Develop

May 10, 2022
Apple Virus Guide: How to Get Rid of a Virus on Your iPhone

How to transfer photos from iPhone to Computer

May 10, 2022
How Does Data Analytics Improve Security Systems?

How Does Data Analytics Improve Security Systems?

May 4, 2022
Discovery Phase For Software Development: How Much Does It Cost?

Discovery Phase For Software Development: How Much Does It Cost?

May 4, 2022
Smart Contract Programming Languages in Blockchain

Smart Contract Programming Languages in Blockchain

May 4, 2022
How Does an Elasticsearch Application Work?

How Does an Elasticsearch Application Work?

May 3, 2022
How To Take Care of Files on Your Computer

The Many Benefits That External IT Support Provides For All Businesses.

May 2, 2022
  • Guest Posts
  • Advertise
  • Contact Us
  • Privacy Policy
Sunday, May 22, 2022
Tech Featured
  • Home
  • Latest Tech
  • Apple
  • How to’s
  • Apps
  • Automobiles
  • Gadgets
  • Gaming
  • Reviews
  • Tech Tips
No Result
View All Result
Tech Featured
No Result
View All Result
Home News

5 Tips to Avoid Front Running by High Frequency Traders HFTs

by techfeatured
Aug 14, 2018
in News
0
0
SHARES
11
VIEWS
Share on FacebookShare on Twitter

The new Flash Boys book has captured the imagination of everyone who invests or trades in the stock market. The fear that the market is “rigged” is everywhere. The CEO of IEX is of course hoping his new exchange will benefit from all the news media hype and panic.

However, most investors and retail traders do not need to worry. If your investments for your long term portfolio are with a large to giant mutual fund or pension fund, then these funds are using Dark Pools which are off the exchange transaction the HFTs can’t see and front run.

If you are a retail trader, remember that most of the orders placed with online brokers for retail traders are filled from that online broker inventory. So your orders never make it to the exchanges. If you are using an Electronic Communication Network ECN, most of those orders are not sent to the exchanges either.

Here are 5 Tips to Avoid Front Running by HFTs:

  1. Study your stock charts using volume large lot accumulation/distribution indicators. These are uptick/downtick based indicators that track the larger lot meaning 50,000 – 500,000 shares, against the smaller lots which are usually 100 shares to as high as 5000 shares. Entering with the giant buying keeps you out of the HFT order flow, because the Dark Pool orders are hidden from HFTs.
  2. Remember that any order 10,000 shares and above is considered a “Large Lot” order and these tend to be sent more often to exchanges if inventories for your online broker are too low.
  3. If you are a day trader, you must accept that HFT activity is going to interfere with your trading. There is just no way of getting around it intraday. HFTs trade 1000-3000 times per second, YOU can only trade on the minute scale by law and by circumstance. Most retail traders could not afford a million dollar HFT trading setup of hardware and software.
  4. Do not use “At Market Orders.” An At Market order tells your broker to fill the order at the market price. This can set up an opportunity for slippage and wider spreads which will give you a higher cost entry. In addition, At Market Orders send a message to the online broker and market in general that you are not an educated, experienced investor or trader. At Market Orders are rarely used by experts and professionals. There are only rare specific purposes for such orders.
  5. Do not use a simple “Limit Order.” Limit orders are the most common reason why retail traders, especially day and swing traders have constant losses. Professionals stopped using Limit Orders years ago and have switched to more complex, multi-tiered controlled bracketed orders. You need to learn these new types of orders if you plan to swing or day trade so that you can avoid getting swept into an HFT downdraft or huge gap.

Huge HFT activity is usually a one day event in a stock based on news, arbitrage from another market or instrument, hedging, retail cluster orders caused by retail traders all using the same trading systems, strategies, MACD or Stochastic indicators, and some technical set ups. One of the huge advantages you as a retail trader using technical analysis and stock charts is that you can see the activity of the HFT, Dark Pool, Smaller Fund, Corporate Buybacks, and many more patterns that tell you who is controlling price and thus how price will behave thereafter.

One final tip is that HFTs rarely shift the trend, so do not start selling short right after a huge HFT down day.

Tags: 5AvoidFrequencyFrontHFTsHighRunningtipsTraders
ShareTweet

For any queries, you can reach us at [email protected]

Latest Posts

  • A Beginner’s Guide on How to Start Webinars
  • What Is a PDF Virus?
  • The Ultimate Guide to TV Antenna Installation
  • How to create multiple email filters in ProtonMail free plan
  • 6 Benefits of Outsourcing Your Business’s Design and Development Projects
Tech Featured

© 2022. All Rights Reserved.

Navigate Site

  • Guest Posts
  • Advertise
  • Contact Us
  • Privacy Policy

Follow Us

No Result
View All Result
  • Home
  • Latest Tech
  • Apple
  • How to’s
  • Apps
  • Automobiles
  • Gadgets
  • Gaming
  • Reviews
  • Tech Tips

© 2022. All Rights Reserved.