2 ms·
We already have evidence from history (where trading latencies and intervals were much higher) that the spreads become much higher as trading frequency goes dow
by growse 3y ago
We already have evidence from history (where trading latencies and intervals were much higher) that the spreads become much higher as trading frequency goes down.
The spread represents the amount of uncertainty and risk associated with a price. Every bip away from the midpoint your bid/ask sits is pure cost to the participant, and that's true for all participants.
Even if I only come to market once a year to splurge my bonus on GME, I'm worse off paying 20c over the midpoint than I am paying 1c.
- Maxion 3y ago> We already have evidence from history (where trading latencies and intervals were much higher) that the spreads become much higher as trading frequency goes down. Would this really hold true linearly across trading frequencies? As we get to shorter and shorter delays, the technological cost for participating in HFT will just keep going up (e.g. building your own microwave transmission towers et. al. sillyness), decreasing the amount of potential participants. Won't this at some point start having the opposite effect - limiting participants in the market to those with enough cash to play? Wouldn't there be some theoretical level of trading delay that should be regulated in order to ensure optimal liquidity as well as market participation?
- Dylan16807 3y ago> We already have evidence from history (where trading latencies and intervals were much higher) that the spreads become much higher as trading frequency goes down. Okay, can you please use this evidence to say how much the interval has to increase for spreads to increase by 1 cent?