- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: What is the Money Board's opinion on high frequency trading?
Posted on 4/2/14 at 9:18 pm to Draconian Sanctions
Posted on 4/2/14 at 9:18 pm to Draconian Sanctions
It's basically algorithmic trading done by computer systems to "front run" stock market orders. In theory this should be illegal but as of now its unregulated due to the complicated nature of the way these systems operate.
These firms can skim a few pennies or even fractions of pennies on countless millions of trades without risk because they can get in front of the bid/ask and buy and sell in fractions of seconds.
It's really only the tip of the iceberg in a market that is totally rigged and manipulated. With that being said I'll be up a 5:am with a hot cup of coffee pondering my next move in the stock/options market.
These firms can skim a few pennies or even fractions of pennies on countless millions of trades without risk because they can get in front of the bid/ask and buy and sell in fractions of seconds.
It's really only the tip of the iceberg in a market that is totally rigged and manipulated. With that being said I'll be up a 5:am with a hot cup of coffee pondering my next move in the stock/options market.
3
Posted on 4/2/14 at 9:34 pm to BlackCloud
exactly, they can monitor when the large traders are making moves. When the large traders place an order, the high frequency trade computers sense it, immediately trade based on that order, and have the ability to jump to the front of the line and counteract the large order before it can be enacted.
For example: a large firm decides to buy 10,000 shares of X Corp. The high frequency trader can start buying that stock before the order is carried out, causing the price to immediately rise before the large firm's order can be processed. Then, the large frequency trader can act as the intermediary and sell their stock to the large firm. Basically, the large firm gets robbed because the high frequency trader knows the large firms move before it technically makes it and can act accordingly.
The high frequency trader is like a Magic: The Gathering player who can play all of their cards at instant speed while the opponent plays everything at sorcery speed. #NerdAlert!
For example: a large firm decides to buy 10,000 shares of X Corp. The high frequency trader can start buying that stock before the order is carried out, causing the price to immediately rise before the large firm's order can be processed. Then, the large frequency trader can act as the intermediary and sell their stock to the large firm. Basically, the large firm gets robbed because the high frequency trader knows the large firms move before it technically makes it and can act accordingly.
The high frequency trader is like a Magic: The Gathering player who can play all of their cards at instant speed while the opponent plays everything at sorcery speed. #NerdAlert!
Posted on 4/2/14 at 9:42 pm to BlackCloud
Working in the trading technology space I've heard a lot about this the last few days. I think there is a lot on confusion surrounded exactly what HFT is and where they fall into the system as a whole. In reality, they are very small. The industry only made ~$1B last year, peanuts when you compare them to the amount of trading volume that occurs everyday.
At the least, calling the market rigged because of this is a gross exaggeration. I'm not saying I agree with what they do but the exchanges give them this ability and they are simply profiting from it.
At the least, calling the market rigged because of this is a gross exaggeration. I'm not saying I agree with what they do but the exchanges give them this ability and they are simply profiting from it.
Posted on 4/3/14 at 4:33 pm to BlackCloud
quote:
It's basically algorithmic trading done by computer systems to "front run" stock market orders. In theory this should be illegal
Why should this be illegal? "Front-running" involves trading ahead of your own client, to whom you owe fiduciary responsibility, and that is why it is illegal. This is not front-running, it is simply using available information about other firms' orders faster than they can themselves.
Traders have been doing this to each other since there has been trading. There's never been anything illegal about it.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News