4 ms·

Counterpoint: flash trading. If I can peek at the orders the little guys put in through scott trade and execute a trade before theirs clears, then I can benefit

Counterpoint: flash trading. If I can peek at the orders the little guys put in through scott trade and execute a trade before theirs clears, then I can benefit from the upward price pressure that their orders induce. Little risk, no government, hardly "fair". In an ideal world new stock markets would pop up without flash trading and the little guys would flock to those instead but there are huge network effects to get over. In this case regulation, or at least shaming the exchanges into doing something, seems appropriate. I'm totally with you on the bailout moral hazard, there are just definitely some zero-work-ethic, unfair, risk-less behaviors that are quite profitable even (especially?) under anarcho-capitalism.

yummyfajitas 17y ago
You are confusing front running with flash trading. What you describe is front running, and is illegal. Flash trading is simply trades based on receiving market data with lower than normal latency (usually by having colocated servers). http://en.wikipedia.org/wiki/Front_running http://en.wikipedia.org/wiki/Front_running http://en.wikipedia.org/wiki/Flash_trading http://en.wikipedia.org/wiki/Flash_trading
- danteembermage 17y ago
  From the articles: "Front running is the illegal practice of a stock broker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers." "Flash trading is [when] certain customers are allowed to see incoming orders [30 milliseconds earlier] than general market participants, ... in exchange for a fee. ... Traders ... can conduct rapid statistical analysis of the changing market state and trade ahead of the public market." So this is not front running, there are no brokers involved for one, and the trades in question already occurred. However if NYSE takes X milliseconds to execute a trade and BATS can fill my order in Y < X - statistical analysis lag time I can get my order filled before the NYSE guy. As far as I know doing the above is not front running or illegal but it is not necessarily full of fairness. So unless NYSE only gives flash traders a peek at completed orders rather than initiated orders the above could occur. It doesn't appear that this is the case: "Automatic programs began issuing and canceling tiny orders within milliseconds to determine how much the slower traders were willing to pay." http://www.nytimes.com/2009/07/24/business/24trading.html http://www.nytimes.com/2009/07/24/business/24trading.html

yummyfajitas 17y ago

You are confusing front running with flash trading. What you describe is front running, and is illegal. Flash trading is simply trades based on receiving market data with lower than normal latency (usually by having colocated servers). http://en.wikipedia.org/wiki/Front_running http://en.wikipedia.org/wiki/Front_running http://en.wikipedia.org/wiki/Flash_trading http://en.wikipedia.org/wiki/Flash_trading

danteembermage 17y ago
From the articles: "Front running is the illegal practice of a stock broker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers." "Flash trading is [when] certain customers are allowed to see incoming orders [30 milliseconds earlier] than general market participants, ... in exchange for a fee. ... Traders ... can conduct rapid statistical analysis of the changing market state and trade ahead of the public market." So this is not front running, there are no brokers involved for one, and the trades in question already occurred. However if NYSE takes X milliseconds to execute a trade and BATS can fill my order in Y < X - statistical analysis lag time I can get my order filled before the NYSE guy. As far as I know doing the above is not front running or illegal but it is not necessarily full of fairness. So unless NYSE only gives flash traders a peek at completed orders rather than initiated orders the above could occur. It doesn't appear that this is the case: "Automatic programs began issuing and canceling tiny orders within milliseconds to determine how much the slower traders were willing to pay." http://www.nytimes.com/2009/07/24/business/24trading.html http://www.nytimes.com/2009/07/24/business/24trading.html