It's entirely computers. The only thing that real people do is continually optimize the algorithms. The way that bid prices and baskets and whatnot turn into f

It's entirely computers. The only thing that real people do is continually optimize the algorithms. The way that bid prices and baskets and whatnot turn into financial transactions of X stocks for Y dollars on the stock exchange is deterministic and publicly known. If you can look at these data as they come into the stock exchange, and calculate it faster than the stock exchange, you can effectively see about 5-10 milliseconds into the future. Using this information, you can put in a bid yourself and insert an additional transaction with you as a middleman between two parties that would have been paired up and traded, and skim a penny per stock by narrowing the spread between the bid price and the ask price. Since the concept relies on predicting and performing a transaction while another nearly-instant transaction is being processed, it's not possible for this to function with human intervention. Even computers aren't fast enough unless the data centers are physically located very close to the stock exchange. Previous HN story, now paywalled: http://news.ycombinator.com/item?id=1007726 http://news.ycombinator.com/item?id=1007726