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How does this HFT practice provide additional liquidity? The only time they purchase shares is right before someone else is going to. It is the ultimate man i
by ynniv 17y ago
How does this HFT practice provide additional liquidity? The only time they purchase shares is right before someone else is going to. It is the ultimate man in the middle, taking a little bit of every single transaction in an exchange. It raises the cost of doing business for everyone (except the HFT trader), and is a net inefficiency in the system, like energy lost to heat in a poor electrical conductor.
- tptacek 17y agoI know a little bit about trading, a decent bit about trading platforms, and not a lot about HFT in particular, but it was not my impression that HFT algos can literally MITM the market. They buy when they detect changes in demand.
- paulgb 17y agoI'm not sure MITM is accurate, but the article's graphic seems to imply that the machines have access to the trades before they are executed. http://www.nytimes.com/imagepages/2009/07/24/business/0724-webBIZ-trading.ready.html http://www.nytimes.com/imagepages/2009/07/24/business/0724-w...
- deleted 17y ago[deleted]
- joezydeco 17y agoI don't consider it an inefficiency as much as a parasitic loss. All those man-in-the-middle fragments are being scooped up and funneled to one entity.