2 days ago
High-Speed Traders Slow Down
There is a rough conceptual distinction between a 'hedge fund' and a 'proprietary trading firm.' The way it goes, approximately, is:
These distinctions are not always and everywhere true, but they are standard stereotypes, and they all sort of fit together. A hedge fund has outside capital, so it can have a longer holding period; a prop firm has only its partners' capital, and they'll sleep better if they go home flat each night. Because a hedge fund can hold positions longer, it will care more about fundamental value; because a prop firm has a short time horizon, it won't care about fundamental value but only about how the market will move in the next few seconds.
