[b0b10101]

> XTX -- the name refers to a mathematical formula used in its trading algorithms

Wow so they do linear regressions?? Incredible.

But in all seriousness, for how long are we going to dress up statistics as some new cool and exciting methods? Are VC's and bosses really this easily fooled?

[abbadadda]

Love this comment! Still, XTX is a cool name, even if the author of the article didn't really get it: https://math.stackexchange.com/questions/2624986/the-meaning... . The nice thing is no VCs are really necessary to fund trading firms like this. Usually the owners have 100% of the capital, split between one or more owners. Not positive of XTX's capital structure, but it is unusual to have VCs involved. GETCO was an exception, and they were pressed to eventually go public (as KCG): https://finance.yahoo.com/quote/KCG/

[zelly]

What they actually do: colocated servers next to the exchange collecting $0.0000001 per trade with nanosecond latency.

Create mystique of doing spooky AI to get more capital which they use to hedge even more trades/second, making more money, which they then attribute to AI which gets them even more capital.

[vecter]

If you knew anything about HFT, you'd know that speed got arbitraged out more than a decade ago. Everyone is fast now. In order to make money, you need true alpha and predictive ability. It's sad to see you disparage their impressive achievements when what they've done is incredibly difficult to accomplish, especially as such a latecomer. I know because I tried it myself ten years ago when it was even less competitive and couldn't make it work.

[throwawaymath]

That's part of it, but HFT is also a pretty saturated field. It's typically not enough to be fast and physically near the exchange these days; that's a necessary but insufficient condition. A lot of nontrivial math and CS is still poured into HFT at places like Two Sigma, Jump and Hudson River Trading.

[mjfl]

I like that it's become a common understanding that AI research is most effective in the marketing department.

[anonu]

So much negativity in this thread.

[Abishek_Muthian]

In India, the exchange was bribed to have the servers within the exchange for algo trading by some high profile institutional traders!

[1]https://wikipedia.org/wiki/NSE_co-location_scam

[smabie]

You can’t make less than a cent per trade in most markets. The bid-ask spread can never be less than a cent. I guess you could make less than cent with commissions, but you certainly can’t make $0.0000001.

[skunkworker]

Time to make your own microwave network

[deepnotderp]

Some (not all!) of the techniques at places like RenTec are fairly sophisticated. Hence their returns ;)

[hogFeast]

Nick Patterson has said they never used anything more complicated than linear regression whilst he was there. The trick was how to use it, not the tool itself...I think people who read a lot of textbooks get obsessed with finding the next complex "secret silver bullet" technique. Good analytical work with basic techniques is often more worthwhile.

[BubRoss]

Like what?

[msla]

> Some (not all!) of the techniques at places like RenTec are fairly sophisticated. Hence their returns ;)

Non sequitur. A chimp throwing darts can beat professional brokers.

https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey...

Maybe their sophistication is a really good PRNG? Or just one that smells of bananas?

Or maybe they've lucked into a model which happens to be doing well now, but won't after the market shifts a bit. Like how the random pickers above did well because random picks include a lot of small companies, and small companies did well over the period being considered in the study.