Commentary

Tim Quast
Traders Magazine Online News

We're All HFTs Now

In this guest commentary, author Tim Quast looks back at the history of HFT and how the market has evolved to where many firms now fit the definition of high-frequency trader.

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February 1, 2001

Trading in Green Acres: Must trading only take place in the middle of a dog-eat-dog urban jungle?

By Sanford Wexler

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  • Trading in Green Acres: Must trading only take place in the middle of a dog-eat-dog urban jungle?

A group of 12 veteran pros is taking a simple down-to-earth approach to the trading rat race. Their secret: Location,location, location.

The group includes former floor traders, brokers and specialists, as well as seasoned, over-the-counter traders. This daring dozen are blazing a pioneering trail of trading, a kind of homesteading on Wall Street. They have exchanged their former high stress-filled trading floors for pastoral calm and sometimes shorter working days. They now work out of an advanced, high-speed electronic trading firm in Wayne, Pa. - far from the maddening crowds.

The firm, e-Knox Trading, in the shadows of Valley Forge National Park, is a 5,000-square-foot facility that uses day-trading style techniques on proprietary and personalized trading systems in listed and OTC equities, futures and other instruments.

One of e-Knox's attractions: Stretches in the nearby park, workouts in the firm's gymnasium when the going gets tough for the industry vets. The park itself has some 3,600 acres and 20 miles of trails for walking, jogging, and biking.

One trader says e-Knox, named after the American Revolutionary war hero Gen. Henry Knox, who had his headquarters in Valley Forge, has turned his life around for the better.

"I used to leave home at four in the morning and get back at seven in the evening," said Gene O'Brien, 41, referring to his former trading life at the Philadelphia Stock Exchange where long days are not unusual for pros.

Now O'Brien - who owned 50 percent of Philadelphia's Bloom Staloff's currency unit while at the Philadelphia Stock Exchange - typically arrives at e-Knox at eight in the morning. "I'm home by five in the afternoon to spend time with my three-year-old son," he said.

Trading Platform

At e-Knox, traders have connections to a variety of research, technical analysis and alternative trading systems, such as Instinet, Archipelago, Bloomberg Tradebook, Trade Cast, Sonic Trading and Island. The firm contends that its proprietary trading platform enables traders to execute their trades in about a half-second.

Veteran floor trader Gary Anderson, 42, who founded the firm last year with Draken Vanderburg, said that in trading today speed is everything. "Countless people are watching the same quote and the first one there wins," he said.

Added Vanderburg, "[At e-Knox] we took a platform and stripped a lot of the bells and whistles off and made an extremely fast platform that goes straight there and straight back."

Anderson said e-Knox "converts" a trader's market theory into "a working computer program." The program is then both "back-tested on 30 years of market data, and continuously monitored for real-time market results."

O'Brien loves it. "You can go anywhere and trade," he said. "But from a customer's standpoint, you want to go to the most easiest and most analytical and where the best service is available. That's the reason I came here."

More Participation

Vanderburg, who has developed systems and technical analysis software programs for floor traders at the Philadelphia Stock Exchange, said he strove to create an environment at e-Knox where pros could participate more fully in the trading process.