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Which tax is it adding? You enter a limit order at a price, and you get filled at that price: that is true with or without HFT. With HFT, the spread is tighter,
by sambe 13y ago
Which tax is it adding? You enter a limit order at a price, and you get filled at that price: that is true with or without HFT. With HFT, the spread is tighter, so either crossing or stepping inside makes your trade more efficient.
- josho 13y agoPerhaps my understanding of HFT is not complete. As I understand the HFT steps in between you and I and buys/sells the asset acting as a third party. When it does this it keeps part of the spread for itself--that's the tax I am referring to, profit for the HFT that as far as I understand serves no value.
- sambe 13y agoNo, that role is generally performed by the broker/bank (who don't like HFT, in general). I'm not sure I see anything wrong with that either though. It is quite normal to take a spread in any industry - an orange seller steps between you and the farmer, for example. I would argue your broker does a lot less for you than a farmer, or high frequency market maker. HFT is generally known to shrink the spread, making trading cheaper for you than it would be without them. They still take a profit, because they take a risk. I'd recommend reading a little about market structure - and preferably not from those with a narrative to sell.