[samspenc]

I think there was a Bloomberg article at the front page of HN a few weeks ago talking about how algorithmic trading was producing less and less profits - can't find the source/link right now.

Is that still true? Or is algorithmic trading on a rebound?

[chollida1]

Algorithmic trading and high frequency trading are orthogonal concepts.

High frequency trading typically refers to two concepts. 1) how long you hold your position, 2) how quickly you can send/cancel existing orders. Though I'll hedge and say there isn't a really accepted definition of high frequency.

Algo trading on the other hand refers to using a computer to automate trading strategies. The typical example is a pair trade with Ford and GM. When they deviate you sell one and buy the other, when the prices come back together you reverse the trade and sell the first leg and buy the second.

Algo trading is here to stay. High frequency has typically been more arbitrage focused and its followed the pattern that happens to all arbitrage opportunities and gone away as more people got in on the action.

[dunster]

High-frequency algorithms are producing less profits. Other forms of algorithmic trading are growing.

[kasey_junk]

You have to be careful with terms in this space (and many of them aren't even well defined).

There are algorithmic trading strategies that are high frequency, but not low latency for instance. Or low latency strategies that are not high frequency.

In my experience what people are talking about when they say that high frequency algorithms are producing less profits, what they really mean is that low latency arbitrage algorithms are not making as much profit.

Lots of high frequency algorithms remain profitable.