That's grossly oversimplified and wrong. > Your order goes out to all of them, and the HFT firm sees it on the nearest market then races (and beats!) your offe

That's grossly oversimplified and wrong. > Your order goes out to all of them, and the HFT firm sees it on the nearest market then races (and beats!) your offer to all of the other markets. No, they have no idea or way to know if your order was big enough to even go to other markets; if they rush out ahead of you and you don't show up, they lose money. What they do is not risk free. > That's why they care about nanoseconds so much, they're racing the speed of light. Incorrect. They about latency because all traders have always cared about being first to get their orders in and this would matter whether HFT existed or not. They're not racing the speed of light, they're racing other traders and that would happen no matter the speed of the trading. It's not the speed that matters, it's being first that matters. Even if you outlawed HFT, being first would still matter except it'd be human traders seeing who could push buttons faster.