High Frequency Trading

The efficiency of traders, the qualifications needed and researched have never been more at stake than today: skills and strategies of traders are constantly evolving and pushing older generations of traders on the side-line. Thus, we focused on trying to define how such a profession has evolved, will be evolving in the future, and if it’s a job that will still exist in the future. Nowadays, many people hold conflicting views on the future of trading and some are convinced that the job will no more exist in the future because robots will replace traders – as machines are said to better perform than humans.

How have traders' strategies and skills evolved and what are their prospects in the future? This question is essential for our society, especially today as traders are frequently accused of unethical behaviour leading to bubbles and crashes; and as Artificial Intelligence and new technologies are taking growing parts in our daily routine. The topic is all the more challenging and interesting since trader is a job with many stereotypes, frequently frowned upon and very difficult to define.

During our research work, we relied exclusively on interviews of traders or people working in the financial field - market finance but also corporate finance. Young traders, old traders, traders which have retired, people who are used to or used to work closely with traders but also a current student at emlyon business school which recently won the Investment Challenge organised by the Finance Club..

Through this video we’ll expose our results on the evolution of Trading in the 21st Century, the specific skills a trader should have to be efficient and finally the impact of automation on trading – how robots and high-frequency trading work, the competition between human and robots.

Hypothesis:

The different literature reviews lead our team to several hypotheses:

Concerning the evolution of trading in the 21st Century, we can first suppose that traders from different generations don’t work the same way, especially since the rising of new technologies which has enabled traders to work more efficiently than before. Elder traders may find that new technologies can also arouse some new problems at work, such as the IT skill that they have to master. We also think that traders may find that the existing regulations in the market are not enough for a healthy trading environment.

Secondly, concerning the soft and hard skills good traders need, it seems that high-IQ people are more likely to be good traders. Moreover, technical knowledge, diplomas and grades are playing a key role to make a career in trading. Finally, we assume that overconfidence of traders is really harmful in the stock market, although intuition of traders plays a key role.

After reading several literature reviews on the impact of automation on trading, we acknowledge that High Frequency Trading has become a major and essential tool in trading. In other words, trading has shifted towards a more informatics and automated direction. Since the key quality to compete with other traders has become the speed, we doubt that will trading still be a profession reserved for humans, since it is impossible to see traders handle huge amounts of information in a few microseconds.

RESULT:

For

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