This is the closely related but currently legal practice of finding a buyer and a seller and jumping between them
On a single exchange, a matching buy/sell order will be traded immediately against each other as soon as the 2nd one appears. There is no time to jump between them, at least not based on publicly available data. Jumping between the trades is only possible if you have insider knowledge about future orders, but that's illegal.
It is legal and common to jump between buy/sell orders on different exchanges. You buy on one exchange, and sell on the other, possibly using different currencies, in which case you can also do a matching currency trade at the same time. That's arbitrage, and provides a useful service for the market.
Ticket fraud is an issue because the artists don't want market prices for their tickets. They want to make tickets lower than market price to satisfy the fans that can't afford expensive tickets.
In the stock market, the shares are already at market price, so there's no point in buying them early and reselling them for a profit because on average you won't get a profit. And trading based on insider knowledge is already illegal, whether you do it fast or slow.
You only trade with a HF counterparty when they have the best price in the market at that point. So, by definition, that means that they've added liquidity. If they weren't there, you would have to wait longer or accept a worse price.
As long as the brokerages transfer your order directly to the market, there's no problem. If they use the early private knowledge of your trade to make a profit by front-running, that's illegal.
High frequency trading mainly profits by front-running.
My point still stands. If you don't want front-running, then target front-running. It's not that hard. Just make sure that an order from any trader stays secret until it hits the exchange where it becomes visible in the order book for everyone at the same time.
If you just remove HFT, then front-running will still continue at a slower rate.
If you want to stop front-running, make it illegal (if not already the case), and regularly audit trading systems. Front running and other abuse of insider knowledge are not specifically related to high frequency trading.
There is nothing inherently good or beneficial to society by having nanosecond trading
Yes, it's market efficiency.
You gain absolutely nothing by slower trades. It only means that there's an increased chance you're paying the wrong price, based on outdated information.
What are the odds the high speed trader will get value-changing knowledge that just happens to come along in the last few milliseconds before the clock tick?
Odds are pretty much 100%. Everything around the world is constantly changing. Somebody doing a trade in Europe will affect some stock in the USA.
The HF traders *are* adding value. They are keeping all global markets in perfect sync. As an investor I can buy the same stock in New York or London, without having to worry about getting a bad deal. Prices in both markets will be exactly the same, because as soon as there appears a tiny difference, within a millisecond somebody will jump in with trades to level the markets again.
The cost for the regular investors is very small. HFT profit margins are tiny.
Why not just A sell to B and they split the difference rather than giving it away?
Nothing is stopping A or B from doing just that, but if they don't take the effort to find the best price, somebody will trade both and make a small profit. That profit is a small price that A and B pay for the increased liquidity of the market.
Why do we need a middleman skimming off the transaction.
We don't need them. But if a buyer is offering $4.56 for a share and a seller is willing to sell for $4.54, then somebody will jump in between. If the buyer/seller were willing to put in more effort they could have matched each other.
You can whooosh all you want, but the fact that a $5 pi zero runs linux. openssl and apache, doesn't mean a $10 microcontroller with 1MB of flash and 128kB of RAM can do the same thing. And there are plenty of good reasons to use a $10 microcontroller over a $5 pi.
Yup, given that expensive general-purpose computers like raspberry pi zero cost half of that.
The raspberry pi zero is not expensive. It's insanely cheap. To see how insanely cheap, try making a list of all the individual components on the pi zero, and add up the cost if you would order them from a normal distributor. Don't forget the PCB.
Your phone is probably the most disgusting thing around. How many people play on their phone while in the bathroom, wash their hands, and then play on the phone again ?
There's a big difference between excessive cleanliness and washing your hands properly.
One can easily lead to another. Suppose you wash your hands for 20 seconds, as described. And then you pick your phone out of your pocket and start playing with it. How long would it take before your hands have the bacteria level of a 5 second wash ?
Really, if you think 5 seconds isn't good enough, then you should be washing your hands again at that point. Plus you should wipe your phone. And the inside of your pockets, and your belt buckle, and your wallet....
But, when you go to the bathroom, wash your hands. Touch raw meat, wash your hands. Shake hands with someone whose hygiene practices you do not know, wash your hands.
How about opening a door ? Moving a chair ? Turning off the light in the bathroom after you wash your hands ? Buying a snack from a vending machine ?
Some things can make you very sick. Fecal bacteria is one of those things.
Slashdot Mirror
This is the closely related but currently legal practice of finding a buyer and a seller and jumping between them
On a single exchange, a matching buy/sell order will be traded immediately against each other as soon as the 2nd one appears. There is no time to jump between them, at least not based on publicly available data. Jumping between the trades is only possible if you have insider knowledge about future orders, but that's illegal.
It is legal and common to jump between buy/sell orders on different exchanges. You buy on one exchange, and sell on the other,
possibly using different currencies, in which case you can also do a matching currency trade at the same time. That's arbitrage, and provides a useful service for the market.
Wait another few ms and you'll see the better offer that the HST has already seen and started accepting,
Nope, that's called front running and it's illegal.
HFT is no different from ticket fraud
Yes, there's a big difference.
Ticket fraud is an issue because the artists don't want market prices for their tickets. They want to make tickets lower than market price to satisfy the fans that can't afford expensive tickets.
In the stock market, the shares are already at market price, so there's no point in buying them early and reselling them for a profit because on average you won't get a profit. And trading based on insider knowledge is already illegal, whether you do it fast or slow.
You only trade with a HF counterparty when they have the best price in the market at that point. So, by definition, that means that they've added liquidity. If they weren't there, you would have to wait longer or accept a worse price.
As long as the brokerages transfer your order directly to the market, there's no problem. If they use the early private knowledge of your trade to make a profit by front-running, that's illegal.
High frequency trading mainly profits by front-running.
My point still stands. If you don't want front-running, then target front-running. It's not that hard. Just make sure that an order from any trader stays secret until it hits the exchange where it becomes visible in the order book for everyone at the same time.
If you just remove HFT, then front-running will still continue at a slower rate.
All of them.
The tweet isn't really important here. Producing 7000 cars is.
If you want to stop front-running, make it illegal (if not already the case), and regularly audit trading systems. Front running and other abuse of insider knowledge are not specifically related to high frequency trading.
There is nothing inherently good or beneficial to society by having nanosecond trading
Yes, it's market efficiency.
You gain absolutely nothing by slower trades. It only means that there's an increased chance you're paying the wrong price, based on outdated information.
They provide liquidity and arbitrage in exchange for a tiny fee.
What are the odds the high speed trader will get value-changing knowledge that just happens to come along in the last few milliseconds before the clock tick?
Odds are pretty much 100%. Everything around the world is constantly changing. Somebody doing a trade in Europe will affect some stock in the USA.
The HF traders *are* adding value. They are keeping all global markets in perfect sync. As an investor I can buy the same stock in New York or London, without having to worry about getting a bad deal. Prices in both markets will be exactly the same, because as soon as there appears a tiny difference, within a millisecond somebody will jump in with trades to level the markets again.
The cost for the regular investors is very small. HFT profit margins are tiny.
A minimum hold of 30 seconds would hurt regular investors more than the small HFT margins.
Why not just A sell to B and they split the difference rather than giving it away?
Nothing is stopping A or B from doing just that, but if they don't take the effort to find the best price, somebody will trade both and make a small profit. That profit is a small price that A and B pay for the increased liquidity of the market.
Why can't the buyer buy directly from the seller?
They can.
Why do we need a middleman skimming off the transaction.
We don't need them. But if a buyer is offering $4.56 for a share and a seller is willing to sell for $4.54, then somebody will jump in between. If the buyer/seller were willing to put in more effort they could have matched each other.
You can whooosh all you want, but the fact that a $5 pi zero runs linux. openssl and apache, doesn't mean a $10 microcontroller with 1MB of flash and 128kB of RAM can do the same thing. And there are plenty of good reasons to use a $10 microcontroller over a $5 pi.
Yup, given that expensive general-purpose computers like raspberry pi zero cost half of that.
The raspberry pi zero is not expensive. It's insanely cheap. To see how insanely cheap, try making a list of all the individual components on the pi zero, and add up the cost if you would order them from a normal distributor. Don't forget the PCB.
I tried to hire a secretary. Never showed up.
Your phone is probably the most disgusting thing around. How many people play on their phone while in the bathroom, wash their hands, and then play on the phone again ?
HTTPS doesn't require much at all.
Try running it on a $10 microcontroller.
You don't eat out much, do you? Food poisoning is a lot more common than most people think.
Washing my hands won't help if the bacteria are already in the food.
Let's wait until the CDC actually produces evidence that everybody's average standard of life will improve, rather than just doing a bacteria count.
There's a big difference between excessive cleanliness and washing your hands properly.
One can easily lead to another. Suppose you wash your hands for 20 seconds, as described. And then you pick your phone out of your pocket and start playing with it. How long would it take before your hands have the bacteria level of a 5 second wash ?
Really, if you think 5 seconds isn't good enough, then you should be washing your hands again at that point. Plus you should wipe your phone. And the inside of your pockets, and your belt buckle, and your wallet....
But, when you go to the bathroom, wash your hands. Touch raw meat, wash your hands. Shake hands with someone whose hygiene practices you do not know, wash your hands.
How about opening a door ? Moving a chair ? Turning off the light in the bathroom after you wash your hands ? Buying a snack from a vending machine ?
Some things can make you very sick. Fecal bacteria is one of those things.
Yes, they *can*. Most of the time, they don't.