Do you think Warren Buffett has had a good run? How about J.P Morgan’s perfect year without a single day of losses?
They have nothing on this obscure company.
Virtu just filed it’s IPO prospectus, giving the world a peak into it’s books. Included in it was this chart:
As the company puts it in the prospectus, “”The chart [above] illustrates our daily Adjusted Net Trading Income from January 1, 2009 through December 31, 2013. As a result of our real-time risk management strategy and technology, we had only one losing trading day during the period depicted, a total of 1,238 trading days.”
In almost three and a half years, the company only saw a single day where it lost money. Most days, it pulled in between $1 million and $2 million from trading.
The company earned $182.2 million in net income with revenues of $664.5 million in 2013.
Don’t bother trying to research how they are so wildly successful in the market in the hopes of duplicating their success. You don’t have a chance.
Virtu is a high-frequency trading (HFT) firm. It floods the system with orders it immediately cancels, pulls the bid and ask prices apart a bit and creates an arbitrage opportunity of a couple pennies. Do this a couple billion times a day and you can make some serious money.
All of this is done in the smallest fractions of a second. Even with the latest technology, HFT firms spend millions to gain a one or two millisecond advantage over their competitors.
It has gotten to the point where the biggest limiting factor for their trading systems is the speed of light. HFT firms now gain advantages by paying massive premiums to rent space in data centers as close to the servers used by exchanges as possible.
With light speed manipulation like this constantly in action, retail investors are completely outclassed and increasingly irrelevant.
There is a silver lining though: HFT can only siphon off a couple pennies of your money per share when you place an order.
