Finance Matters

… with a little help from our OpenAI friends

Dean Turpin

Tue May 9 05:06:13 UTC 2023

"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett

Random saying about finance

"Money doesn’t buy happiness, but it does give you the freedom to choose how you spend your time."

Random saying about trading

"The secret to successful trading is to never risk more than you can afford to lose."

Why Squarepoint?

Squarepoint Capital is a leading global quantitative trading and investment firm focused on providing innovative, technology-driven solutions to the world’s most sophisticated investors. Squarepoint Capital has a proven track record of success in quantitative trading and investments, and strives to provide the best possible experience for its clients. Squarepoint Capital has a team of experienced professionals with a deep understanding of markets, risk management, and technology, which allows them to make decisions quickly and with confidence. Additionally, Squarepoint Capital offers access to a wide range of global markets, as well as comprehensive research and analytics capabilities to help investors make informed decisions.

Kernel bypass

Kernel bypass is a technology that allows applications to bypass the operating system’s kernel in order to access hardware directly. This allows applications to take advantage of hardware features that are not available through the kernel, such as hardware-accelerated encryption or high-speed networking. By bypassing the kernel, applications can also achieve higher performance and better resource utilization, as the kernel doesn’t need to be involved in every single system call. Kernel bypass is used in many high-performance applications and is becoming increasingly popular in cloud-native architectures.

Limit orders

A limit order is an order placed with a broker to buy or sell a certain amount of a security at a specified price or better. The limit order instructs the broker to only execute the order if the security can be bought or sold at the specified price or better. This allows investors to control the maximum amount they are willing to pay or receive for the security. Limit orders can help protect investors from the risks associated with market volatility and can help protect their profits.

List of common trading strategies

  1. Trend Trading: This strategy involves riding the trend in the direction of the overall market. Investors use technical analysis to identify the trend and then capitalize on it by buying and holding, or buying and selling at key points.

  2. Momentum Trading: Momentum traders look to identify stocks that are moving strongly in a particular direction and seek to capitalize on the trend. Momentum traders buy stocks that are rising in price and take profits when the momentum wanes.

  3. Scalping: Scalping is a short-term trading strategy that looks to capitalize on tiny price changes in a stock. Scalpers look for stocks that are trading in narrow ranges and then enter and exit the positions quickly to make small profits.

  4. Arbitrage: This strategy involves taking advantage of price discrepancies in different markets for a security by buying and selling it at different prices. Arbitrageurs look for discrepancies in the price of a security in different markets and capitalize on the price difference.

  5. Hedging: Hedging is a strategy used to reduce the risk of investments. It involves taking an offsetting position in a security to minimize the risk of losses. Hedging can be used to protect against losses due to market volatility and other risks.

HFT firms

  1. Citadel LLC -
  2. DRW -
  3. Virtu Financial -
  4. Tower Research Capital -
  5. Flow Traders -
  6. Quantlab Financial -
  7. Hudson River Trading -
  8. XR Trading -
  9. Sun Trading -
  10. Jump Trading -

Alternative platforms

  1. TradeStation
  2. eSignal
  3. Interactive Brokers
  4. Robinhood
  5. TD Ameritrade
  6. Lightspeed
  7. TradeZero
  8. ChoiceTrade
  9. Fidelity
  10. SpeedTrader

Quantative trading

Quantitative trading is a trading strategy that uses mathematical models and algorithms to analyze financial markets and make trading decisions. It involves analyzing large amounts of data to identify patterns that can be used to predict future market movements and to make trading decisions. Quantitative trading is typically used by large institutional investors such as hedge funds and mutual funds. This type of trading is also known as algorithmic trading or automated trading.

Algorithmic trading

Algorithmic trading is a form of automated trading that uses complex algorithms to analyze trading data and execute orders. Algorithmic trading strategies are programmed to assess market conditions and identify trading opportunities in order to execute trades on a trader’s behalf at lightning-fast speeds. Algorithmic trading is often used by large institutional investors, such as hedge funds and investment banks, to quickly execute large orders in the marketplace. Algorithmic trading strategies are designed to make trading decisions based on mathematical models that take into account factors such as price, volume, and time. Algorithmic trading is often used to capitalize on small price movements in highly liquid markets.

There are three major blocks in an Algo Trading System:

  1. Market Data Handler (e.g., FAST handler)
  2. Strategy Module (e.g., crossOver strategy)
  3. Order Router (e.g., FIX router)

High-frequency trading (HFT)

High-frequency trading (HFT) is a type of algorithmic trading that uses advanced computer systems to rapidly execute trades in the financial markets. The high speed and large number of transactions make it possible for traders to make profits from small fluctuations in the market. HFT is used by a variety of financial players, including banks, hedge funds, proprietary traders, and market makers. HFT strategies include arbitrage, market making, and order anticipation. HFT technology has enabled traders to move in and out of positions in milliseconds, taking advantage of small price discrepancies that can occur in the markets.

Day trading

Day trading is a type of investing strategy in which a trader buys and sells financial instruments within the same trading day, often multiple times in the same day. Day traders typically buy and sell stocks, options, futures, and other financial instruments, looking to capitalize on short-term price movements in the markets. Day traders must be well-informed and have a comprehensive understanding of the markets in order to identify opportunities for profit and act quickly and efficiently when they arise.

Market makers

Market makers are entities that provide liquidity to the market by placing bid and ask orders in the markets they make markets in. They are typically large firms or banks that have the resources to take on the risk of holding large amounts of the asset they are trading so they can provide two-way markets. They help to ensure there is enough liquidity in the markets to facilitate efficient trading, and they also provide price stability by providing both buy and sell orders. They make money by collecting the difference between the bid and ask prices they quote.

Financial instruments


Derivatives financial instruments are financial instruments that derive their value from an underlying asset or security. Examples of derivatives include futures, options, swaps, and forwards. They are used by investors and companies to manage risk, hedge exposure, and speculate on the future price movement of the underlying asset. Derivatives can be used in many ways, such as hedging against currency fluctuations or to gain exposure to certain markets. They are also used to create leverage, allowing investors to gain amplified exposure to the underlying asset without having to own it.

Bid-ask spread

The bid-ask spread is the difference between the bid price and the ask price of a security. The bid price is the highest price a buyer is willing to pay for a security, while the ask price is the lowest price a seller is willing to accept for a security. The bid-ask spread is typically used to measure the liquidity of a security, as the tighter the spread, the greater the liquidity.

Trading protocols

Buy/sell side

Buy side and sell side are terms used to describe different entities in the financial markets. Buy side firms generally refer to financial institutions, such as mutual funds, pension funds, and hedge funds, that purchase securities for their own portfolios. Sell side firms generally refer to investment banks, brokerages, and other financial institutions that facilitate the buying and selling of securities for their clients. Buy side firms typically have more capital to invest than sell side firms, and may have fewer restrictions on their trading activities. Sell side firms generally have more expertise in analyzing and trading securities, but may be limited in the amount of capital they can deploy.

Which side are these?

Challenger banks

Challenger banks and investment banks are both types of financial institutions that provide services related to banking and finance.

The main difference between challenger banks and investment banks is their primary focus. Challenger banks focus on providing retail banking services to individual customers, while investment banks provide services such as corporate finance, capital raising, and financial advisory services to institutional clients.

Challenger banks offer services such as current accounts, savings accounts, mortgages and credit cards. They also offer customers digital banking services, such as online banking platforms and mobile apps. Investment banks, on the other hand, provide services such as underwriting, mergers and acquisitions, market making and securities trading.

Challenger banks offer customers more convenient and cost-effective banking services, while investment banks offer their clients a wide range of specialized financial services and access to capital markets.

Trading platforms

  1. Bloomberg Terminal
  2. eSignal
  3. MetaTrader 4
  4. NinjaTrader
  5. TradeStation
  6. Thinkorswim
  7. CQG Trader
  8. Sterling Trader Pro
  9. Trade Navigator
  10. X_TRADER