5. High frequency trading

Consider the following graph, which shows Hylack Enterprises extremely volatile stock trend from 1 PM to 4 PM on a Tuesday. Each point on the graph represents a 15-minute time interval and the price the stock was tracked to be at that interval.

Hylack Enterprises Daily Stock Trend1234109876543210PRICE (Dollars)TIME (Hour in the day)

If a trader developed a series of algorithms and bots to help her profit from predictable price trends, then which of the following algorithms would have resulted in the highest profit? (Note: Assume there were no transaction costs associated with the transactions and that purchase and sell orders occur immediately.)

If the price of Hylack Enterprises stock decreases by exactly $1 in 15 minutes, submit an order to purchase 1,500 shares. Then, if the stock price increases by at least $4, submit an order to sell 1,500 shares.

If the price of Hylack Enterprises stock decreases by exactly $1 in 15 minutes, take the short position on 1,500 shares. Then, if the stock price decreases below $2, offset the short position.

If the price of Hylack Enterprises stock decreases by exactly $2 in 15 minutes, submit an order to purchase 1,200 shares. Then, if the stock price increases by more than 100 percent in the last hour, submit an order to sell 1,200 shares.

If the price of Hylack Enterprises stock increases by exactly $1 in 15 minutes, submit an order to purchase 6,000 shares. Then, if the stock price increases above $7.25, submit an order to sell 6,000 shares.