4 ms·
Would this not happen if we did the trades at human speed? Wouldn’t we get to the same result, in theory, perhaps just a little slower?
by themagician 8y ago
Would this not happen if we did the trades at human speed? Wouldn’t we get to the same result, in theory, perhaps just a little slower?
- tptacek 8y agoNo, we ran that experiment. In addition to the fact that humans market makers actively colluded with each other to divert money from buyers and sellers into their pockets, the advent of automated trading also decimated spreads. I think maybe the problem is that even if the trades themselves are "slower", the actual underlying activity that the market is pricing isn't, and the gap between the real speed of events and the speed with which the market can price those events expresses itself in uncertainty and higher spreads.