Matt Johnson
This top 10 reasons list is by no means “the fact”, but is based on our own experience serving such firms with our Advisory service and those using our low-latency HFT platform.
Having systems and procedures in place to recover from unplanned situations could save the business.
Having the right monitoring systems to let algos know that everything is ok. From monitoring market data, networks, exposures, and bad behaviors.
Lack of risk management is one of the reasons companies go out of business. Rare events happen all the time.
In high-frequency trading (hft), there is no way to simulate your strategy with enough confidence. Models must be tested in LIVE with real money.
Not having the right picture of how the orders you are sending will impact the microstructure of the market, potentially, will make your strategy fail.
Constant research is paramount. for the continued success of a trading firm.
Those who don’t have direct access to the market (DMA) are going to be at a clear disadvantage from the beginning.
Technology and the Team: those who don’t have the tech team in place, will certainly fail without a doubt. Having the best tech and engineering teams in place, you can afford to take risks with more confidence, and the statistics show that it will likely achieve success rather than not.
Accessing quality liquidity pools and order flow is one of the most important things.
Surprisingly not having enough capital for operations and trading is the most common problem. Setting up a quantitative fund with all the resources needed is the easiest part. You just need to budget whatever you need and then execute it.