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High Frequency Trading

bronco2078bronco2078 Posts: 10,212 ✭✭✭✭✭
in Precious Metals



I found this interesting article over on Chris Mortenson's Blog about the effects of high Frequency Trading on the markets.




HFT's in the market

They are estimating that 50 to 70 percent of the daily volume is from computerized trading programs.

The part that blew my mind is that these trades are not tagged . They are tagging by the clearing house only not the trading computer or entity . A computer trading program could simultaneously enter a buy and a sell for the same stock and buy from themselves.

If the bids and asks aren't tagged how are these traders taxed on these trades when they actually execute ?

Comments

  • derrybderryb Posts: 36,792 ✭✭✭✭✭
    a lot of HFT in the paper metal markets as well

    "Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey

  • jmski52jmski52 Posts: 22,822 ✭✭✭✭✭
    My understanding is that they can enter the same buy & sell trade and execute it so fast that they can drive the price to whatever price they are looking for, and when they hit someone's stop-loss order they simply pick up the bargain and run the price back up to where it was before any other trades can execute.

    If they have pre-knowledge of where the stop-loss orders are situated, it becomes that much easier.

    Do it often enough and it adds up to a nice arbitrage income, causing damage to every other real market participant all along the way.

    If you don't play, they can't win.
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    I knew it would happen.
  • cohodkcohodk Posts: 19,100 ✭✭✭✭✭
    Day traders have different accounting rules than J6P
    image
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,792 ✭✭✭✭✭
    Most HF traders belong to the elite firms that don't have to play by the rules. image

    "Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey

  • JustacommemanJustacommeman Posts: 22,847 ✭✭✭✭✭


    << <i>Day traders have different accounting rules than J6P
    image >>



    My monthly statements used to be delivered by UPS. image

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