High frequency trading and risk management

[AaronPierce]

I'm currently working on my thesis about risk management using financial derivatives. It's a big topic, so I want to focus on specific areas. Here comes a quite annoying question: Can High Frequency trading be used as a tool in risk management? I'm thinking writing something about the application of derivatives trading, high frequency trading kinda stuff, in risk management. Ideas, guys, viable ideas please. Thanks alot!

 

[Tsotne]

Can High Frequency trading be used as a tool in risk management?

Could you be more specific? In what sense?

This is NOT the same as asking: "Can derivatives instruments be used as tools for risk management?"

 

[Yike Lu]

High frequency trading is not a financial derivative...

 

[Tsotne]

High frequency trading is not a financial derivative...

I know what both are. I stated that it was unclear from what point of view is the question asked. Thats what I said:

This is NOT the same as asking: "Can derivatives instruments be used as tools for risk management?"

Where it is easily understandable what is the question about and we would respond-"Yes, derivatives are commonly used instruments used for hedging...blablabla......"

Here comes a quite annoying question: Can High Frequency trading be used as a tool in risk management? I'm thinking writing something about the application of derivatives trading, high frequency trading kinda stuff, in risk management.

Good remark-It's a huge topic. Just for an example: At my university, one student got many honorable rewards for writing a thesis named: "Hedging with economic factors", in which he used the theories to explain how inflation, recession, interest rate volatility could be used for hedging a financial portfolio. I moved from the main topic but I think the point is clear. He was awarded because he found, discovered that strategy. Here in the above post we are asked the same. Do we have to find ways how to use High-Frequency Trading as risk management tool?
That's why I think the question should be more specific. That's my personal opinion Aaron. Just a suggestion. We can think of ways but seems a bit difficult to give a complete answer. Good Luck with the thesis.