Got a tricky question? Receive an answer from students like you! Try us!

Trading & Dealing in Security Markets - Essay Example

Only on StudentShare
Undergraduate
Essay
Finance & Accounting
Pages 4 (1004 words)

Summary

The author of this descriptive essay mainly focuses on the discussion of the topic of Trading & Dealing in Security Markets. The author starts with the short introduction of the topic and comes to the interesting conclusions at the end of the research paper…

Extract of sample
Trading & Dealing in Security Markets

The author of the essay "Trading and Dealing in Security Markets" begins with that High Frequency Trading – HFT makes use of powerful computers that automate the trading process and where trading software takes the decisions to buy, sell or hold stock. The practice is also called as Algorithmic trading, Algo trading, automated trading or black box trading. Since the commands are executed by software systems, positions on various stocks are held for durations that vary from a few seconds to a few minutes. HFT has been blamed for ‘flash’ price variations where the prices changes very rapidly for no apparent reason. With high profits almost assured and reduction of losses to a minimum, many traders have started using HFT. In a way, HFT represents the inevitable move to high technology. Like many other areas of business processes such as procurement, automatic ordering in supply change management, ERP systems, humans are removed from decision-making and power is vested in machines. At the end of the essay the author concludes that since HFT yields high profits, many more firms will take up this practice. HFT certainly has some ill effects on the stock movement and these needs to be constrained and regulated. The regulations must not place HFT under disadvantage and new technology must not be punished. The author also gives his recommendations. Thus, traders should not be allowed to switch off their machines when stocks are falling. This will ensure HFTs remain operational even when they stand to make a loss, just as any day trader. ...
Download paper
Not exactly what you need?

Related Essays

Commodity Trading in the United Kingdom
This research study examines how two of the largest commodity traders in the world, Vitol and Glencore International, conduct their commodity trading activities through the commodity exchanges in the United Kingdom and in its OTC market. The pit trading system of the years gone by is now replaced by electronic systems that receive orders from traders through the Internet to match these orders with other orders for execution of a transaction. In an electronic exchange the clearinghouse regulated by a supervisory body and the government acts as an intermediary, to deliver lower costs, security,…
52 pages (13052 words)
Trading Simulation Assignment
Date Trade Currency Contracts Maturity Price 9/2/2012 Buy GBP/USD 10 March 2012 1.5854 15/2/2012 Sell GBP/USD 10 March 2012 1.5765 15/2/2012 Buy GBP/USD 10 March 2012 1.5685 16/2/2012 Sell GBP/USD 10 March 2012 1.5765 19/2/2012 Buy GBP/USD 10 March 2012 1.5835 19/2/2012 Sell GBP/USD 10 March 2012 1.5860 1.1 Analysis of portfolio value and risk of the portfolio. This report a delineation of trading including strategies adopted, but before this, so as to effective mitigates the risk of earning high losses or losing considerable amount of profit due to speculation behaviors. There was need to…
10 pages (2510 words)
Share Trading Assignment
Trading Activities Buying of Shares with the notional ?100,000 888 Holdings PLC (888.L) ?31.25 as at September 30, 2011 11:07 Prev Close: 32.75 Open: 32.25 Bid: 35.50 Ask: 36.00 1y Target Est: 1.05 Beta: N/A Next Earnings Date: N/A Purchase cost ?54,000.00 1,500 shares times the ask price of ?36.00 per share. Stamp Duty ?270.00 ?32,750 times 0.005 (Note: 0.005 = 0.5%) Brokers commission ?10.00 It is ?10.00 whatever the size of the trade. Total ?54,280.00 Shares of 888 Holdings Plc seemed to be very lucrative hence the desire to buy them. What’s more, there has been an increasing trend in the…
8 pages (2008 words)
Stock Price Reaction to Merger Announcements: an Empirical Note on German Markets
Comprehensive data on a range of German companies is assembled and correlated as a means of quantifying the degree of abnormal returns within a given time interval, measured from the date of the merger announcement. Ramifications of these abnormal returns are discussed with respect to ongoing trends in the German market. Introduction Essential to any attempt to understand market movements are fluctuations is the analysis of financial signals. Finance being an issue of perception as much as mathematics, the public response to warning signs and indicators is an integral predictive tool for…
12 pages (3012 words)
Trading Simulation Report
A portfolio once built and left alone is of no use. Hence, I have decided to carry out a trading simulation and an in depth analysis of the four companies that have been chosen by me. As all four of these companies provide different products and services, it is almost obvious that different returns are expected from each of these companies. Although the portfolio had been developed keeping in mind mainly the long term aspects but analysing it a short term may give us an insight about the future. The four companies that had been considered, along with an introduction and a summary of their…
10 pages (2510 words)
Role of high frequency trading in modern financial markets
High Frequency Trading or HFT used propriety trading strategies which allow traders and firms to conclude transactions within the micro-seconds. With the help of sophisticated computer algorithms as well as other tools positions can be easily taken and closed within seconds or less than a second to take advantage of the smallest movements in the prices of the securities. HFT firms are not only market makers but they offer critical liquidity to the market also. In 2000, the overall volume of HFT was relatively low however, during the recent years, it witnessed an explosive growth. Firms are…
23 pages (5773 words)
Investment opportunities and risks in stock markets: A comparison between emerging and developed economies
For over two decades the emerging economies’ markets have generated handsome returns for investors and thus created exciting investment opportunities globally. A careful analysis reveals that the growth of developing economies such as Latin America, Asia, and Eastern Europe began to grow at faster rates compared to developed economies. Some of the major causes for high growth may be attributed to trade liberalisation measures, new economic reforms, adherence to global trade pacts, and opening the door for Western investment. Meanwhile, increased urbanisation and escalating middle class…
61 pages (15311 words)