HFT (high frequency trading) problem
We have a bot that does HFT, as you know these bots per day can make hundreds of trades or more. the bot has an efficiency of 99% each trade. The question is with how many trades does the bot cease to be profitable in our portfolio?
(this is a more probabilistic question)
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1 solution
The logic and formula behind this problem is the efficiency of the bot, which is the probability of the numbers of trades that the bot makes, that is, 0.99^N and to know the percentage of failure 1- 0.99^N then now we must find that approximate of N falls to less than 50% where we stop being profitable with our bot. trying we know that it is approximately 69 to 70.