2 ms·
How does 1 second ticks stop liquidity and arbitrage? It just stops the faster connections wins. HFT aren't really adding liquidity since they only buy when th
by dalore 12y ago
How does 1 second ticks stop liquidity and arbitrage? It just stops the faster connections wins.
HFT aren't really adding liquidity since they only buy when they can sell straight away. So there was already a liquid purchase there.
Arbitrage, if something is cheaper elsewhere, the 1 second tick will still bring the price into parity.
- kasey_junk 12y ago"How does 1 second ticks stop liquidity and arbitrage? It just stops the faster connections wins." No it doesn't. Let's suppose in your 1 second time tick you have more people attempting to buy at a price than sell at the same price? Who gets to buy and who doesn't? If it is FIFO then the speed advantage is still there. If it isn't FIFO it can be applied to non 1 second ticks as well. "HFT aren't really adding liquidity since they only buy when they can sell straight away." This is a completely untrue statement. Lots and lots of HFT hold inventory. Their inventory periods can range from seconds to minutes to weeks. The impact is that by being fast market makers can reduce some of their risk, which means that they can price more aggressively. If they can't reduce that risk via speed, they will reduce it in other ways, namely pricing less aggressively. This will increase price spreads and decrease liquidity.