Why it Becomes Extremely Profitable to be a High-Frequency Trader when there is Volatility

Edgar Perez's The Speed Traders: An Insider's Look at the New High-Frequency Trading Phenomenon That is Transforming the Investing World
The Speed Traders and High-Frequency Trading
The Speed Traders and High-Frequency Trading
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The Speed Traders
High-frequency Trading
Edgar Perez

• Trading
• Investments
• Wall street

New York City - New York - US

Aug. 14, 2011 - PRLog -- Equity volume from Aug. 4 through Aug. 10 was a record for any five-day period, according to data compiled by Bloomberg and Credit Suisse Group AG. The daily average of 15.97 billion shares beat the previous record of 15.94 billion from Sept. 15 through Sept. 19, 2008. Lehman Brothers Holdings Inc. (LEHMQ) filed for bankruptcy on Sept. 15. This relationship between these record volumes and high-frequency trading is explained by Mr. Edgar Perez in The Speed Traders, An Insider's Look at the New High-Frequency Trading Phenomenon That is Transforming the Investing World (http://www.thespeedtraders.com), hardcover recently published by McGraw-Hill Inc.

As mentioned in The Speed Traders, "Liquidity really should be thought of as a commodity. It is a commodity, and in like any other market, it has supply and demand. Volatility is the symptom of the absence of liquidity." We saw the past week that there was no liquidity, so markets were free to move in huge increments in short periods of time. "In a supply and demand market, when there is a shortfall of supply or, equivalently an excess of demand, it becomes very profitable to be a supplier in the market. When oil prices are sky-high, producers of oil make a fortune. However, that does not imply that their activity exacerbates the mismatch between supply and demand, in fact, it does the opposite. So while oil producers are making money, oil prices being sky-high, by distributing oil into the market place, which tempers the price of oil and drives it back down by bringing the imbalance between supply and demand closer to equilibrium."

"The same thing is true with liquidity. Liquidity is the opposite of volatility. When there is volatility in the market, it is because there is a shortfall of liquidity, there is a shortfall of high-frequency trading, because high-frequency trading is the backbone of liquidity in today's markets. For that reason, when there is volatility, it becomes extremely profitable to be a high-frequency trader."

The Speed Traders, published by McGraw-Hill Inc., is the most comprehensive, revealing work available on the most important development in trading in generations. High-frequency trading will no doubt play an ever larger role as computer technology advances and the global exchanges embrace fast electronic access. The Speed Traders explains everything there is to know about how today's high-frequency traders make millions—one cent at a time. In this new title, The Speed Traders, Mr. Perez opens the door to the secretive world of high-frequency trading. Inside, prominent figures drop their guard and speak with unprecedented candidness about their trade.

Mr. Perez is widely regarded as the pre-eminent networker in the specialized area of high-frequency trading. He has been featured on CNBC Cash Flow (with Oriel Morrison), TheStreet.com (with Gregg Greenberg) and Channel NewsAsia (with Lin Xue Ling), and engaged as speaker at Harvard Business School’s 17th Annual Venture Capital & Private Equity Conference, High-Frequency Trading Leaders Forum 2011, CFA Singapore, Hong Kong Securities Institute and Waters USA 2011, among other global forums.

Mr. Perez was a vice president at Citigroup, a senior consultant at IBM, and a consultant at McKinsey & Co. in New York City.  Mr. Perez has an undergraduate degree from Universidad Nacional de Ingeniería, Lima, Peru (1994), a Master of Administration from Universidad ESAN, Lima, Peru (1997) and a Master of Business Administration from Columbia Business School, with a dual major in Finance and Management (2002). He belongs to the Beta Gamma Sigma honor society. Mr. Perez resides in the New York City area and is an accomplished salsa and hustle dancer.
Mr. Perez is one of the great business networkers and motivators on the lecture circuit; he is available worldwide for the following speaking engagements: Present and Future of High-Frequency Trading, The Real Story behind the "Flash Crash", Networking for Financial Executives, and Business Networking for Success.

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The Speed Traders (http://www.thespeedtraders.com), Mr. Edgar Perez, founder of the prestigious business networking community Golden Networking (http://www.goldennetworking.net), opens the door to the secretive world of high-frequency trading (HFT).
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Tags:The Speed Traders, Liquidity, Volatility, Vix, Hft, High-frequency Trading, Edgar Perez
Industry:Trading, Investments, Wall street
Location:New York City - New York - United States
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