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Can we quantify how much advantage we get as retail investors? And how does it compare to the billions spent on dedicated networking, radio gimmickry, and spec
by hakfoo 6y ago
Can we quantify how much advantage we get as retail investors? And how does it compare to the billions spent on dedicated networking, radio gimmickry, and specialized hardware and software magic, plus the opportunity cost of pulling all that talent and capacity from other industries?
If every trade settled at, say, the rolling average price of the last 60 seconds-- or 60 minutes-- it would dramatically quiet the "noise" in the market. There would still be enough demand from conventional investors, and the averaging policy could actually stabilize the riskiest scenarios (i. e. a temporary loss of market makers causing orders to settle at comically out-of-bound prices)
- 1123581321 6y agoHigh speed trading is an effective route to achieve that policy as it reduces the need to keep resources tied up in market making, an activity that requires compensation. Any other method to force a uniform price, i.e. a price that cannot quickly change in response to information, creates arbitrage opportunities that are greatly unfavorable to retail investors.