Financial Crisis High Frequency Trading ( Hft )

Financial markets are intertwined into the lives of everybody today. These markets set prices for food, gas, and various other items that people use often. There are even public cable television channels, such as CNBC, that exclusively cover financial markets. The worlds current financial events such as the US debt crisis, and the Federal Reserves’ quantitative easing have caused a rise in the public’s awareness of the financial markets. One of the most feared events in financial markets is a crash. A crash is a very steep drop in price of all securities in that market. Some recent crash events are the financial crisis of 2008, flash crash of May 2010, and August 2011. Flash crashes are a relatively new phenomenon to the markets, and these recent, unprecedented events have brought controversy to one of the newest forms of trading called High Frequency Trading(HFT). HFT is the act of executing millions of dollars worth of trades at sub second speed according to predictiv e software, or statistical models and algorithms. HFT allows hedge funds, and other types of financial companies the ability to trade in multiple markets faster than ever before. This incredibly broad and super fast ability to trade is one of the main reasons HFT has come under fire as a detrimental form of trading. Some of the controversy that HFT experiences consists of possible involvement in flash crashes and added ï ¿ ¼volatility to the markets, as well as possible manipulation of price. Recently there haveShow MoreRelatedEssay High Frequency Trading1493 Words   |  6 Pages 1.0 High Frequency Trading 1.1 What is High Frequency Trading High frequency trading is a form of automated trading that uses super computers to transact or process mega transaction orders at super fast speed, which are mostly measured in microsecond or milliseconds. 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