This pretty exotic trading style may now have worked its way down from Flash Guys at the beginning of this century in New York to an AIM share last month. Wikipedia has an article on this technique but a summary is below and then the evidence of what has been happening to Hurricane Hurricane Energy (LON:HUR) follows.
In financial markets, high-frequency trading (HFT) is a type of algorithmic trading characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages high-frequency financial data and electronic trading tools. … HFT uses proprietary trading strategies carried out by computers to move in and out of positions in seconds or fractions of a second.
HFT
High-frequency traders move in and out of short-term positions at high volumes and high speeds aiming to capture sometimes a fraction of a cent in profit on every trade. HFT firms do not consume significant amounts of capital, accumulate positions or hold their portfolios overnight. As a result, HFT has a potential Sharpe ratio (a measure of reward to risk) tens of times higher than traditional buy-and-hold strategies.
High-frequency traders typically compete against other HFTs, rather than long-term investors. HFT firms make up the low margins with incredibly high volumes of trades, frequently numbering in the millions.
Hurricane Energy (LON:HUR)
This is a Oil explorer with production with a strong private investors base and limited institution investors. Two RNS’s delaying exploration issues had been published in December and late January with along delay forecast for next RNS in Mid March making this share vulnerable
Daily Trading Volumes
Stats__Past from_31/12/2018_____Note______________Current from 27/01/2020 to date
Max_____________182,929,684 on 17/07/2019______109,926,959____on _ 06/02/2020 ref date
One in 20day____ 31,592,096_________________________ 71,457,931
Q3________________ 12,734,154________________________ 43,633,830
Median_____________ 8,652,434________________________ 23,574,562
Q1__________________ 5,934,111________________________ 15,781,913
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What does this mean for Private Investors ???
1____Good points appear to be:-
HFT firms … don’t accumulate positions or hold their portfolios overnight.
High-frequency traders typically compete against other HFTs, rather than long-term investors
Buy Sell spreads are VERY Tight which can keep every ones dealing costs down
Lot sizes for Automatic Dealings are half the EMS whilst Ordinary Dealings above EMS can average 30% number of trades and 70% volume per day
Even with tight margins the current daily median absolute PRICE RANGE (Hi - Lo)/close is 7% for this much increased volume.…
