3 High-Frequency Trading Techniques to Run Your Business Like a Hedge Fund


Having spent the last decade of my life as an entrepreneur, people are often surprised to learn that I have a master’s degree in financial engineering and have worked as a high-frequency trader at BNP Paribas for eight years.

It wasn’t until I saw my entrepreneurial friend working on a laptop on the beach while sipping a piña colada that I realized my job wasn’t as cool as I thought it was. I made the switch and have never regretted it, but the high-frequency trader mindset never really left me.

Over the years I have found that I have incorporated financial principles into my business with great success. I could probably write a whole book about it (and I could very well), but for the sake of brevity, here are three that every entrepreneur should know.

1. True productivity is the sum of many small successes

As a high-frequency trader, my job was to use algorithms and mathematical formulas to trade billions of dollars worth of stocks per day in microsecond increments. My individual trades might only generate fractions of a cent, but the results would translate to huge returns for the bank over time.

In this world, microseconds can equate to millions of dollars in profit and loss fluctuations (PNL) – so saving time was an incredibly important part of my job. I can remember days when we were on the phone with a telecom company and asked them to build their towers a little higher so we could send information a few microseconds faster. It was such a big deal.

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This mindset of saving microseconds has had a huge impact on how I approach operational efficiencies (now my company’s core offering, Leverage). In general, I find that people are looking for big breakthroughs that will save a lot of time. But the reality is usually very different.

Real productivity is the sum of many small wins. If you can save even a few seconds in a process that is performed many times a day, you can end up with a huge time savings. That’s why I always tell my clients not to get discouraged when we don’t find big breakthroughs and instead learn to celebrate the small wins.

I look forward to saving a second in my store. If you can adopt this mindset and extend it to your entire team, you can achieve incredible time savings.

2. Role rotation

During the block holiday you are excluded from all systems. You can’t enter the building, register via email, nothing. It’s a full lockdown to give the company time to make sure nothing bad happens. This was for compliance reasons, but I noticed it had many other benefits.

Each time I did this exercise, I came back to find an improvement in how my book was being traded. My colleagues came with a very different perspective and found areas that could be improved or made more efficient that I had simply glossed over.

Role rotation is something I think all companies should be doing to some degree – even if it just means someone completing a process outside of their role. It can spark innovation that leads to better processes, and it can diversify your team by introducing them to areas of the business they would never have seen otherwise.

3. Measure what matters

When people hear about my background, the first question I get is if I have any good stock tips for them. They’re usually shocked to learn that I don’t actually invest in the stock market, and I wouldn’t do that unless I had a million dollars worth of computing power to do so.

Because in high-frequency trading, everything is based on data. My algorithms would select investments based solely on financial data. What the company was doing or what was happening on CNBC didn’t matter to me – the only thing I cared about was the metrics.

That’s because metrics allow you to make informed decisions. Without metrics, you’re just guessing—and that’s true in business, too.

If you want to make the right decisions in your business and avoid setbacks, you need to make data-driven decisions as much as possible. If you don’t have a metric to make your decision, the first thing you should do is figure out what that metric would be and start tracking.

The opinions expressed here by Inc.com columnists are their own and not those of Inc.com.



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