High-Frequency Trading blesses Citadel and Renaissance Tech with High-Profits
|October 4th, 2009||
|Chicago-based hedge fund manager Citadel Investment Group has revealed earnings of $1 billion in 2008 from Tactical Trading, the fund’s high-frequency trading unit. The figure was disclosed in a Chicago court case involving alleged violated noncompete agreements against several former Citadel employees.
High-frequency trading uses computers to make a series of instantaneous decisions based on statistics and mathematical models to capitalize on minute-by-minute changes in the market and it has emerged as one of the few successful strategies in 2008. According to an article from the Wall Street Journal, other funds implementing the strategy, including hedge fund Renaissance Technologies, also had positive outcomes last year as they capitalized on the rapid fluctuations in the market: Renaissance’s Medallion fund gained 80% in 2008. Headed by founder and mathematician Jim Simons, Renaissance specializes in technical trading models using mathematic and economic analyses of the market.
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