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Really, high-frequency trading is the most common sort of trading? That is absolutely astonishing. Do you think that says anything about how much stock (by valu
by jeremyjh 14y ago
Really, high-frequency trading is the most common sort of trading? That is absolutely astonishing. Do you think that says anything about how much stock (by valuation) is invested long-term?
- thaumasiotes 14y agoEven if, say, 95% of stock is held in long-term investments, high-frequency trades will dominate the metric "% of trades executed", since high-frequency trading holds the stock for less than 1/20th of the time long-term trading does. Suppose num_long shares of stock are held in long-term investments, as a permanent feature of the economy. Suppose further that the average duration of a particular long-term investment is two years. Then every two years, num_long trades will occur under the banner of "long-term investing". Suppose num_hft shares of stock are held in HFT investments, and that the average duration of an HFT investment is one day. Then every two years, 730.5 * num_hft trades will occur under the banner of "high-frequency trading".
- jeremyjh 14y agoBut who cares what the % of trades are? They don't get more weight as a stakeholder because they are trading a lot. In fact they have absolutely none, but that doesn't diminish the control held by the 95%.