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The fall of high-frequency trading: A survey of competition and profits

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  • Serbera, Jean-Philippe
  • Paumard, Pascal

Abstract

We investigate high-frequency trading (HFT) strategies, inventorying the strategies already studied in the literature and introducing innovative strategies detected by private institutional research. To this end, we expand the existing classification, and we offer names for new categories. In a complementary but original manner, we introduce counter reactions from professional traders in response to HFT predatory strategies. These human answers reverse the usual framework of competition between high-frequency traders (HFTs) and low frequency traders (LFTs) and also widen this cadre to HFTs algos (predators) versus execution algos.

Suggested Citation

  • Serbera, Jean-Philippe & Paumard, Pascal, 2016. "The fall of high-frequency trading: A survey of competition and profits," Research in International Business and Finance, Elsevier, vol. 36(C), pages 271-287.
  • Handle: RePEc:eee:riibaf:v:36:y:2016:i:c:p:271-287
    DOI: 10.1016/j.ribaf.2015.09.021
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    References listed on IDEAS

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    Cited by:

    1. Yergeau, Gabriel, 2016. "Profitability and Market Quality of High Frequency Market-makers: An Empirical Investigation," Working Papers 16-3, HEC Montreal, Canada Research Chair in Risk Management.

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