3 ms·
> I think higher spreads would “slow” highest frequency trading. They cross the spread many more times per dollar than regular investors to it costs them more.
by dsacco 9y ago
> I think higher spreads would “slow” highest frequency trading. They cross the spread many more times per dollar than regular investors to it costs them more.
If I understand your thesis correctly, you want to decrease liquidity in order to reduce the speed at which high frequency trading can be executed?
I'm not following your point about transaction costs - or do you mean that you'd limit HFT by reducing liquidity, which in turn would reduce their volume, reducing their trade discounts?
- netcan 9y agoI don’t want anything in particular, just speaking to the earlier post (speaking on a Bernie Sanders proposal, I think). The “thesis” is that by putting a small tax on transactions, you will decrease the profitability of trading strategies that involve trading securities many times therefore discouraging them. Liquidity is a trickier concept. I’m not sure if it has a consistent measurement definition. If you define liquidity as turnover or something close, then lowering trading frequency lowers liquidity by definition. How that affects liquidity in the practical sense for a “regular” investor is an uncertainty. It’s hard for me to imagine that a trader that holds stock for an average of 1 year will have more trouble getting in or out of Google stock, but maybe I’m wrong.