Last week we launched our new services. To give you a bit of an insight, we'll delve into each service with a detailed blog. Up for today: Fintech Development. We'll go into detail how Initium Strategies approaches high frequency trading (HFT) and explain our dual-layer ecosystem. Read more below!
High-frequency trading refers to the practice of placing large sets of trades on open markets with as core focus speed. The general mandate of succesful high frequency trading is that the "tick-to-trade" time is sub-microsecond, whereas in smaller hedge-fund operations with non-ideal network circumstances that number comes closer to sub-millisecond.
In algorithmic and high-frequency trading (HFT), speed is the foundation of profitability, but the execution of capital transactions in sub-microsecond speed leaves a lot of risk on the table. That’s where our philosophy comes from:
"Speed without absolute control is just a faster accident."
At Initium Strategies, we combine low latency execution with an automated, synchronized risk layer so that valid strategies fill in sub-microseconds, while the system is risk-aware and controllable.
A strong trading system is deterministic, fast and strictly focused on one hot-path, consuming market data, activating a signal and executing based on said signal. The infrastructure needed for achieving the fastest hot-path must be clean, and not bogged down by controls, checks, input and variables. As a rule of thumb we at Initium strictly separate this layer.
Of course, once the trading layer is abstracted to achieve the lowest possible tick-to-trade latency, there are no risk controls in place within that trading layer. Which brings us to the second layer that our trading infrastructure ships with: The risk management layer, a separate, standalone program that has the ability to cancel and pause the trading layer,without being involved directly on the main trading hot path.
This philosophy creates the best of both worlds: The lowest hypothetical tick-to-trade time accompanied by deterministic software free of garbage collection and jitter, accompanied by a well structured and easily maintainable risk-layer that is not bogging down the execution layer. In the next paragraph we will break these layers down in detail.
Initium Strategies believes that execution and control are inherently linked but also separated. Separated in the sense of: Tacking on control in the execution layer creates delays, interlinked in the sense that the control layer must be execution aware and have the ability to place logical stops on the execution layer.
In modern trading, tick-to-trade latency, aka, the time it takes between market data, strategy consideration, signal activation and order submission, is the battleground. Winners are first, and second-place finishers are not “less profitable” but often first losers. Optimizing this path must happen in the low-level side of the program.
When a system fires thousands of orders per second, a simple software bug can cause serious financial losses within seconds. At Initium we believe in automated risk models that ensure that every decision is validated while it’s leaving the network card. Creating one distinct advantage: Overall risk controls are applied, without bogging down the tick-to-trade latency by continuous checks in the main trading logic.
Our team has a combined 15+ years of experience with trading infrastructure, where we applied our two core principles. Leading us to highlights of trading the sell side through the LUNA-TERRA collapse, and achieving multiple public leaderboard positions across exchanges/brokers. We take this experience and provide both tailor fit advisory as well as ad-hoc development capacity for (upcoming) trading firms and funds.