Defi Manual: Part 3 — Financial Weapons
Here is part 3 of the Defi Manual. You can reference part 1 here and part 2 here.
Both Cefi and Defi system has their own niche to beat the market. You think the market is unbeatable after all. There is a weapon to beat the market hard enough to make profits. However, they are risky and may require sophisticated knowledge to operate and facilitate such trades. Some may even be illegal.
Cefi’s weapon: HFT
HFT is short for High-Frequency Trading. It utilized computer trading speed as leverage to transact a large number of orders in fractions of a second to get in and out of the market quickly. The faster the speed, the higher profits you can gain.
HFT is only for the rich
They are highly regulated and the only handful of players that successful in the field. However, they made up 56% of equity trade in 2010.
You can win big in a volatile market
On May 6th, 2010, one mutual fund company makes a single trade of $4.1 billion on that day.
You can also lose big in the market
HFT is no room for mistakes. Knight Capital was lost $440 million in just 45 minutes due to algorithm errors in 2012.
