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No, it's more like they want to buy a kagillion shares and before they can complete the trade a HFT buys them and sells to Norway for slightly more. It's not go
by jonknee 13y ago
No, it's more like they want to buy a kagillion shares and before they can complete the trade a HFT buys them and sells to Norway for slightly more. It's not good for me, I sold to the HFT. It's just intraday noise that only does the HFT any good.
- harryh 13y agoIf that was actually happening it would mean that spreads (the difference between where market makers buy and sell stocks) were large. In fact, the exact opposite is true. Spreads are tiny. Much smaller than they used to be! This is because there's not just one HFT. There are tons. So if one of them tries to do this you won't sell to them, you'll sell to one of the other ones for a better price. Yay competition!
- crbnw00ts 13y agoExactly. Competition among all the HFT entities has squeezed a lot of the volatility out of the market: "Volatility, a measure of the extent to which a share’s price jumps around, is about half what it was a few years ago." Quoted from here: http://www.businessweek.com/articles/2013-06-06/how-the-robots-lost-high-frequency-tradings-rise-and-fall#p2 http://www.businessweek.com/articles/2013-06-06/how-the-robo... Although I wish I could find a better article / source with more info and some hard data to back that up. That sentence is not nearly as compelling as it could be if it had more details.