Financial charts

High Frequency Trading: The Highs and the Lows of Digital Connectivity

This infographic is a great illustration of the huge performance gains that can be made when processes are connected and digitized – but also the greater volatility that flows from automation and connectedness.

In this instance, the mechanism of trading financial securities has moved from carrier pigeon in the 17th century to the computerized automation of trades in early 1983. High Frequency Trading (HFT) using automation reached a zenith in 2011 with the ability to execute a trade in a few nanoseconds.

But HFT has also produced crashes, such as the Flash Crash of 2010 when $1 trillion was wiped off the market in a single day by the computerized selling of $4bn assets. While automation and connectedness has created volatility, digital often comes up with solutions.

 

Helen Beckett

Author: Helen Beckett

Helen Beckett is the Community Manager of the Business Value Exchange. She has been a writer and editor for over 20 years and takes a particular interest in the challenges facing the CIO in today’s business climate.