E Opportunities In A Volatile Market: Virtu Financial And High-Frequency Trading

When looking at macro-economic trends, it also seems that heightened volatility is here to stay. A survey of economists, conducted by Bloomberg, showed that fears of a recession occurring within the next 12 months is at 6 year high. Nearly 25% of participants see an economic slump occurring within that time period. In December a similar Bloomberg survey put the percentage at 20%, clearly, the market slump in December changed some minds. Median projections for 2019 U.S economic growth have edged down to 2.5% from a previous 2.9%. The continued U.S government shut down, which President Trump has threatened to continue for years, also adds to uncertainty. Besides the fact that it is a drag on economic growth, it also delays the release of government data such as retail sales, which investors and analysts use to make decisions.

A short-term recent rally in stocks aside, the medium and long term pictures for the U.S economy and the market appears to be cloudy. This likely means that volatility will remain heightened, which will result in strong earnings at Virtu Financial and other high-frequency trading firms. This provides investors a great opportunity to hedge some risk and to own a stock that is likely to outperform as the rest of the market enters into a storm. 

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Disclaimer: This material has been distributed for informational purposes only and is the opinion of the author, it should not be considered as investment advice.

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Howie Sandberg 1 year ago Member's comment

Fascinating, thanks for bringing this area to my attention.