What you are describing is market making, and has existed pretty much as long as there are markets. Before computers rendered guys in the pits extinct, the spre

What you are describing is market making, and has existed pretty much as long as there are markets. Before computers rendered guys in the pits extinct, the spreads were much wider and those guys were known to literally front run you on occasion. You had legions of brokers and floor traders all taking home fat six figure paychecks each year and your trading costs were in the tens of dollars, not pennies. Those legions of traders have been replaced by a much smaller number of programmers who take home comfortable six figure paychecks. They take on obligations as market makers to always buy and sell no matter what the market is doing. How that worked was that he got a phone call saying "buy me 50k IBM" from a broker. Guy on the floor thinking smart money is behind this, or even not thinking there is smart money behind this, he just knows an order like that is going to move the market- will place his own order ahead of it and likely exit the trade immediately after. The advent of electronic trading, even when people were still on the floor, made this much harder to do since it became easier to slice and dice that order up to a bunch of different people, and there were now much better paper and electronic trails of the activity. Now its all computers talking to one another and this is not possible.