Q&A by Don Bright
I have received dozens of questions regarding the recent book release Flash Boys by Michael Lewis. Dennis Dick, one of our top traders at Bright Trading, has been studying this phenomenon for years. He has kindly offered to explain how he battles high-frequency trading (HFT), which follows. You can read more from him at www.premarketinfo.com.
From Dennis Dick, CFA, Bright Trading LLC:
Is the market rigged? That is a bold accusation, but there is no doubt that some high-frequency trading (HFT) firms enjoy some distinct advantages over human traders. It is important for human traders to recognize where they are disadvantaged and then adjust their trading strategies accordingly. Here are five tips that have helped our traders adapt to this HFT environment:
1. Lengthen your time horizon. HFTs have a number of advantages over human traders. They have advantages based on speed, co-location, and early access to order flow through payment for order flow arrangements.