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>front-running usually involves an agency problem Historically, in the HFT world, it also involved getting ahead of big orders in the order book by taking adva
by hnnewguy 12y ago
>front-running usually involves an agency problem
Historically, in the HFT world, it also involved getting ahead of big orders in the order book by taking advantage of how orders are systematically queued or prioritized.
- tptacek 12y agoHow does that differ from the way every market maker deals with informed traders? (Serious question, not a challenge.)
- hnnewguy 12y agoWell, this is merely a hobby interest to me, and it's a been a while since I read 'Dark Pools' but: it's less "using information" to front-run, and more "taking advantage of computational glitches" to jump the queue and get higher priority in the order book. I have no idea if this is still an issue (doubt it), but it was in the early days of HFT. Anyway, I'm out of my element...'Dark Pools' is a decent read if you're into this stuff.
- tptacek 12y agoI like _Dark Pools_ ('kasey_junk recommended it as an antidote to _Flash Boys_) too. For a slightly older but more authoritative nuts-and-bolts explanation, and surprisingly well-written, Larry Harris _Trading and Exchanges_ is basically the _TCP/IP Illustrated_ of money.