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You are wrong. HF traders front run to profit off individual trades by beating them to better prices. Day traders try to get an edge and exploit it to profit in
by DSingularity 6y ago
You are wrong. HF traders front run to profit off individual trades by beating them to better prices. Day traders try to get an edge and exploit it to profit intraday by simply selling higher than they bought.
- andi999 6y agoAnd why would that be sustainably possible?
- DSingularity 6y agoHF firms? Or pattern traders? I’m not sure if my answer is good enough but the volatility is always there to exploit.
- BasedInfra 6y agoFront running is illegal. Its payment for order flow which is earning off the spread while also keep it tight and liquidity in the market.
- DSingularity 6y agoSo... basically front running ?? That’s what it seems like you are describing. They make money when they manage to get ahead and provide the liquidity needed to fill the orders. What am I missing?
- seabird 6y agoIt is not front running, and can only be conflated with it if you don't know what front running actually is, don't know what PFOF actually is, or both. Firms that pay for order flow are paying to be the counterparty to transactions that have razor-thin arbitrage opportunities. They are not placing orders with advance knowledge of upcoming orders; they are reacting extremely quickly to fraction-of-a-cent spreads in the price of a security and pocketing the difference.
- hellbannedguy 6y agoNothing. I can’t believe it’s legal. And yes, I know about the free trading it has supposedly provided. Maybe free trades are dangerous to to most retail traders?
- porb121 6y agoa market maker by law has to provide prices better than offered by the current market. frontrunning does not do that.
- ubercow13 6y agoSo you would rather your liquidity was provided by someone slower and more expensive?