[deathflute]

Sorry, that doesn't make sense. HFT is actually not at all capital intensive compared to some other strategies that hedge funds run. The whole point of HFT is to produce high sharpe returns on a small capital base. These strategies do not scale.

[jayruy]

I think you're saying the same thing, but I agree deathflute has stated the problem more clearly from a business perspective: the strategies do not scale, yet they need to reinvest proceeds into the business to remain competitive. the result is more technology to execute the same strategies faster, rather than mitigating risk by diversifying into new strategies. this is why people call HFT an arms race.

[egiva]

Exactly - thank you for clarifying my original post - I agree it was poorly presented, but I do think we were both elaborating the same point. HFT IS an arms race as you point out, and the details I find interesting have to do with infrastructure changes - i.e. relocating server farms to Siberia to gain a few fractions of a second in transmission time, etc.