The topic I intend of pursuing for my Rhetorical Analysis is High Frequency Trading, or HFT for short. Here is how HFT works: A trader, typically with a strong math or programming, who are known as “quants”, develop algorithms based on price and/or chart patterns. They then plug these algorithms into a computer which executes thousands and millions of trades in seconds, hence the nickname “flash trading”. They try to capture a one cent profit which, on thousand and millions of trades a second, becomes highly profitable. It sounds like a genius way to make money in the markets for those able to create such algorithms. So, why all of the controversy? Many believe that these traders have a millisecond advantage over the others. This may sound like nothing, but with an enormous amount of volume per second, a millisecond could very well be a ten minute advantage. Also, with the incredible speeds of their computers, many feel that these “quants” can see trades even before the exchanges receive them.

I chose this topic because it is something that affects me directly. I am an active trader in the markets, and I would like to see if these quants are running ahead of my trades. Also, it intrigues me how they are able to execute such trades in vast amount of volume without having a highly noticeable effect on the market. I have heard arguments that say HFT has helped the markets tremendously, and their evidence is solid.

I do have a question regarding the paper. Since my topic is highly technical, may I start the paper by giving some information about the terminology I will be using and how the market operates? That way, the unaware reader can follow along with, hopefully, little to no confusion.