Introducing the HFTE Model: A Multi-Species Predator-Prey Ecosystem for High-Frequency Quantitative Financial Strategies

Abstract

In this article we take a new approach to studying electronic trading and systemic risk by introducing the HFTE model. We specify an approach in which agents interact through a topological structure designed to address the complexity demands of most common high-frequency strategies but designed randomly at inception. The primitive strategy ecosystem is then studied through a simplified genetic algorithm. The results open up intriguing social and regulatory implications with the helping doors of mathematical biology and game theory, with specific mirror points summarized for the sake of illustrating the puzzling findings.