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September 14, 2012
6 million shares of SPY, times $0.0001, equals … hmm … $600.
By itself, this is a slow way to get rich. But multiply that figure by the number of such algorithms running at any given time—in the “high hundreds”—and it starts to get interesting. One reason high-frequency trading works at all is that it takes place much too fast for human beings to get in the way. -- Raging Bulls: How Wall Street Got Addicted to Light-Speed Trading
Posted by gerardvanderleun at September 14, 2012 6:07 PM. This is an entry on the sideblog of American Digest: Check it out.
Your Say
This is ridiculous. It creates nothing except some liquidity. No wonder there is $3 trillion sitting in bonds, CDs, and money markets earning next to nothing. The Fed keeps doing QE trying to force people to take more risk. Shutting down or limiting high frequency trading would make more sense. It is to weep.
Posted by: Jimmy J. at September 14, 2012 7:35 PM
Piffle. In the old days, when an order came into the desk on the trading floor, it wasn't the kid with crutches who ran it to the pit.
The early bird still gets the worm in the world of equities, futures, commodities and foreign exchange.
Posted by: gedaliya at September 15, 2012 5:26 AM
Piffle, traders buy or sell ahead of big orders, something you can't access. You are always behind the curve; in fact your order may not be executed until the big boys clear the wire.
Posted by: Peccable at September 15, 2012 7:01 AM
This does not register on the scale of things which rob the small investor in the stock market, chief of which is himself. Were interest rates at any historical level and not contrived by the government to steal savers money for its own debt, the stock market would be at one-third of its present levels. Savers instinctively know that this will not happen until they enter the stock market.
Posted by: james wilson at September 15, 2012 8:57 AM