5 ms·

High frequency trading is front running.

• yxhuvud 3y ago
  Front running is illegal, so no.
  • worik 3y ago
    > Front running is illegal, so no Yes Front running is illegal HFT is front running There are very good reasons to believe that. The earliest proponents of HFT may have made money by more efficiently using price information. But now there are so many of them that is no longer possible It is crime. The most useful model for understanding international high finance is "organized criminal networks"
    • chollida1 3y ago
      You are confidently incorrect. Front running is when you take an order from a client and before executing it out your own order in first so you benefit from the bumpe or drop in stock price that the client would cause. The key here is you have advanced knowledge of the order before it hits the market and you have a legal requirement to execute client orders before your own. I believe it’s also been ruled to be front running if you get knowledge of the client order in advance of it being sent to the market by a third party. But having a faster network and computer to allow you to react faster than others is not front running. Take this is an extreme, if I watch a market ticket and react manually with in 20 minutes to news and you read about the news in the paper the next day, did I front run you by trading before you? It’s the duty to execute a client order before your own and not tell others abouT the order before it hits the market that is the requirement for front running.
    • twic 3y ago
      The biggest HFT firms are prop shops. They don't even have clients. There aren't any client orders for them to front run! You know not what of you speak.
      • CyberDildonics 3y ago
        This is the cheapest defense of HFT front running. Buying order flow and front running other people's clients is still front running. You see what people want, you get it faster and you sell it back to them after you buy it.
        • lxgr 3y ago
          How on earth can you front run other people’s clients? That contradicts the definition of front running!
          • CyberDildonics 3y ago
            Does this circular logic for front running actually convince anyone? I already answered your question in the post you replied to.
            • lxgr 3y ago
              I find it pretty convincing myself. Are there other “bad” (for the general investing public) strategies out there? Sure! Should some of them be illegal, or be made unprofitable by coming up with fairer (for long-term investors) markets and market structures? Definitely! But that doesn’t make them the same thing as front running. Why call “bad strategy/phenomenon X” “Y” and confuse everybody?
            • yxhuvud 3y ago
              Yes, because it makes it very clear you have no idea of what you speak of, as you don't even know enough to use the correct terms for things. Front running is to act on confidential information in the market to the detriment of the initiator of the information. Once something is no longer confidential, ie the customer order has been processed, and all the information is open, then there can no longer be any front running.
              • CyberDildonics 3y ago