Q&A by Don Bright
ARE CHANGES DOING US GOOD?
Mr. Bright, first of all, I want to thank
you for your assistance in the past. You
have been kind enough to send back
email responses personally, and I read
your column in Stocks & Commodities
There have been so many changes
in the markets over the last few years,
some good, some not so. I am looking
forward to a new year of trading and
was hoping you could help me with a
few issues. Perhaps either give me some
solace, or send me in another direction.
Thank you in advance:
1. Fear or fantasy. Subpennies and highfrequency
trading (HFT). You’ve written
about both, but I would love to hear
your opinion about them for 2013.
2. Strategies. You’ve spoken highly about
opening-only plays, pairs trading,
market on close (MOC) imbalances,
and basic market making. How are
traders making these things work?
And is there anything new in the Bright
3. Market centers. I’ve been told there
are dozens more market centers than
I can see on my screen. Can you tell
me if there are any edges that can be
derived from these locations? How
many do your people use?
Good questions. I’m going to defer,
once again, to Dennis Dick, a top Bright
trader and CFA, for the first question:
“Adjusting your trading style for the
HFT toll: the one thing that high-frequency
trading has done is monopolized the
top of the order queue. That means the
high-frequency traders are always the
first to get filled at any pricing increment.
They have various tools that allow them
to get to the top of the queue, whether
through the use of subpennies, order
types, or speed.