@article {Saraiya64, author = {Nigam Saraiya and Hitesh Mittal}, title = {Understanding and Avoiding Adverse Selection in Dark Pools}, volume = {2010}, number = {1}, pages = {64--77}, year = {2010}, publisher = {Institutional Investor Journals Umbrella}, abstract = {The explosive growth of high-frequency trading (HFT) activity presents a host of challenges for traders looking for quality block executions in dark pools. HFT firms are making over $21 billion in annual profits, according to the TABB Group, and much of that is derived by capturing short-term alpha at the expense of traditional buy-side traders. Adverse selection is no longer as straightforward as it once was or as easy to avoid. This article looks at several methods for measuring both short-term and long-term adverse selection, as well as how to effectively filter for quality liquidity.}, issn = {978-0-9842550-3-0}, URL = {https://guides.pm-research.com/content/2010/1/64}, eprint = {https://guides.pm-research.com/content/2010/1/64.full.pdf}, journal = {Trading} }