Economist on high frequency trading

Last evening I collected some links on high-frequency trading (HFT) and I was amazed to see Economist running a story on HFT in its new edition a few hours later. This is not to suggest that I did something amazing; I was amazed to see that even Economist is covering HFT.

The article says that "The basic idea of HFT is to use clever algorithms and super-fast computers"; it however stops short of explaining the role and complexity of algorithms. The article started with an ex-Goldman employee stealing the proprietary code and went on to explain the impact of high computation speed of trade execution using super computers etc.

All the big banks have access to super computers which may perform same number of computations per unit of time. All the banks try to search (or poach you can say) the best price for the trade however what really differentiate their trading strategies are the algorithms that are developed by the "quants". It is the models and their complexity that determine the execution speed and execution efficiency (in terms of price searching); and not the computational power of the computer alone.