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The Infinitely Long Life of A Microsecond
An Introduction to High Frequency Trading (HFT)
‘The long run is a misleading guide to current affairs. In the long run we are all dead,’ — John Maynard Keynes, A Tract on Monetary Reform, 1923
The world of finance is staid — sedate, respectable and unadventurous. However, once every decade, a few innovations turn into a tsunami and engulf the financial markets — think blockchains and cryptocurrencies today. Blockchains are reshaping the role of banks, currencies, venture capital funds and the world of financial services in general.
Two such innovations in the twentieth century changed the world for retail investors — one beneficial and widely celebrated; the other low profile and detrimental. The creation of the first index fund by John Bogle in 1976 i.e. Vanguard 500 fund which tracks the returns of the S&P 500 and marked the first index fund marketed to retail investors. Index funds provided the best way for retail investors to invest in the stock market.
Another innovation, which many think had the opposite effect on retail investors i.e. it put retail investors at a disadvantage and largely went unnoticed by the masses, until a New York Times article published in…
