How High Frequency Trading Became “The Most Cutthroat Business!” - Ex-HFT Trader, Annanay Kapila

Video Description

❗ACCESS OPPORTUNITIES EXCLUSIVE TO OOO VIEWERS: https://app.youform.com/forms/e2jpsj4z ❗ In this episode, former Tower Research and Flow Traders quant Annanay Kapila breaks down the reality of high frequency trading, HFT strategies, and top automated trading systems. He explains what quant researchers actually do inside elite firms—where world-class math talent competes in a true zero-sum market. Annanay goes deep into market making strategies, latency engineering, alpha generation, and how quant trading teams iterate models nonstop to stay competitive. It’s one of the clearest looks at quantitative finance, execution risk, and the real mechanics behind profitable automated trading systems. Annanay also gives a rare inside look at Tower Research crypto trading during the 2022 crypto winter, breaking down crypto trading strategies, API latency edge, and structural weaknesses across early exchanges. He shares first-hand insights from the FTX collapse explained—how withdrawals froze, how APIs failed under stress, and how liquidity vanished in real time. These experiences shaped how he thinks about exchange design, risk controls, and the future of fintech startups. All of this leads into QFEX, a new platform aiming to bring crypto-style perpetuals to traditional assets with real infrastructure and institutional-grade reliability—what Annanay calls “FTX without the fraud.” We also cover hedge fund strategies, automation, and the next generation of trading platforms. We also talk about: How high frequency trading, low latency trading, and market microstructure really work inside Tower and Flow The two schools of quant trading: Chicago-style traders vs MIT-style systematic trading How firms build market making strategies, order book dynamics models, and short-horizon alpha signals Why HFT strategies have low capacity and how firms try to scale into longer-term systematic trading The shift from pure spread capture to predictive statistical arbitrage and directional signals Why prop firms want to launch hedge fund strategies and fee-based businesses like Citadel and Two Sigma What quant researchers actually do: feature engineering, execution algorithms, and avoiding overfitting in machine learning for trading How QFEX is built: exchange architecture, matching engines, and API latency for 24/7 automated trading systems How Annanay hires: identifying real contributors, evaluating technical depth, and filtering candidates for quantitative finance roles Inside Tower Research crypto: crypto trading strategies, API edge, and managing exchange risk FTX collapse explained: liquidity freezes, failed withdrawals, halted APIs, and real-time risk management failures The future of trading: fintech startups, algorithmic trading, perpetual futures, and next-generation investing platforms 01:12 Inside high frequency trading culture and competition 03:00 What drives top performers in HFT 03:47 Why elite traders never retire early 04:50 How Tower structures quant trading work 06:14 Chicago versus MIT quant trading styles 10:29 How modern market making actually works 12:25 Why prop firms struggle to scale capital 16:36 Annanay's work at Tower and Flow 19:15 Tower's crypto trading and API edge 19:24 How firms handled the FTX collapse 23:42 Inside FTX culture and HK crypto scene 27:11 What QFEX is building for traders 29:37 QFEX beta launch and early rollout 29:56 Why building an exchange is exciting 32:48 QFEX execution edge and team DNA 36:24 Why quants leave HFT for startups 38:22 QFEX culture versus HFT culture 41:46 How meritocracy works inside QFEX 47:52 How QFEX hires true A players 53:05 Backchanneling and evaluating candidates 53:27 What YC actually teaches founders 55:21 Lessons from meeting Paul Graham and Sam Altman 58:41 Why startups fail and how to pivot 1:00:48 Why young people should stay optimistic 1:11:22 Closing remarks and QFEX vision