3 ms·
Let's say you want 100 shares paying no more than $49.99. Your screen shows the following sell orders: Exchange A: 25 @ 49.99 Exchange B: 20 @ 49.98 Exchange C
by vpeters25 13y ago
Let's say you want 100 shares paying no more than $49.99. Your screen shows the following sell orders:
Exchange A: 25 @ 49.99
Exchange B: 20 @ 49.98
Exchange C: 60 @ 49.97
You expect your order to get filled with all shares from C and B and just 20 from A at the highest price, the problem is Exchange A is closest to you, B is 50 miles away, and C is 800 miles away in Chicago.
The HFT bot sees your order arriving at Exchange A, since they have a fastest link to B and C, they buy the orders there and put them on sell to you at $49.99 just a few milliseconds before your order arrives.
- AndrewBissell 13y agoThis is just a problem with my broker lacking the technical sophistication to synchronize the transmission of my orders in such a way as to ensure the best execution. Whether it's worth it for me to switch to a broker with that capability probably depends on how much volume I trade. Either way, this problem can be solved much more simply by the application of some simple order timing algorithms than by regulations attempting, in effect, to repeal the speed of light.
- iopq 13y agoYes, but it's kind of stupid that they could get away with it in the first place since most people do not have collocation with the exchanges.
- snowwrestler 13y agoIf you put in an order for $49.99, that is the price you said you are willing to pay. It is not fleecing you if someone meets the demand you express. If you really wanted to pay $49.97 then you should have put in that order instead.