FEAR & GREED | Business News Inside the remarkable world of high-frequency trading
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Jan 5, 2026 Roger Montgomery, founder and chief investment officer of Montgomery Investment Management, dives into the intriguing realm of high-frequency trading. He unpacks how it operates with tiny per-trade profits, uses an apples analogy to explain arbitrage, and highlights Renaissance's legendary returns. Discover why most profits go to insiders, the unique crypto futures arbitrage fund by ARK, and how these strategies can diversify portfolios, especially in volatile markets. A fascinating peek into a world rarely seen by everyday investors!
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Renaissance's Hidden High-Speed Edge
- Jim Simons' Renaissance Technologies made enormous returns by using high-frequency, data-driven arbitrage strategies.
- They generated about 63% pa over 45 years but only traded staff money, so retail access is closed.
Tiny Trades, Massive Compounding
- High-frequency arbitrage captures tiny price differences by trading thousands of times a day to lock in fractions of a cent repeatedly.
- These strategies rely on speed, algorithms and constant market microstructure opportunities rather than traditional long-term investing.
Who Actually Runs High-Frequency Shops
- Roger names Australian and global firms that run high-frequency trading businesses like Optiver, Tibra, Susquehanna and MCT Trading.
- He explains that you generally must be a staff member to participate in their profits, making them inaccessible to outside investors.