Would like to know what are the annualized returns that HFT firms normally aim for

AI & Machine learning
1

Hi,



I have always been curious about the way HFT firms operate. I would like to know what are the annualized returns these firms normally aim for and do they actually achieve it?

 

2

Hi Subash,

 

The answer to this would depend on the following:

 

  1. Geography of the trading destination(s) that the particular HFT firm is active in.
  2. Type of strategies they focus on (Market Making, Arbitrage, Directional, etc)
  3. Scale at which they are operating in terms of capital.
  4. Market activity in the duration you are checking. Generally for HFTs, higher activity and volumes in market helps in better profitability.

You can get the actual answers for big HFT firms by going through the annual reports of some of the top HFT firms that are publicly available, like for Optiver & Virtu. Hope this helps!
3

Thanks for the prompt reply