On Sat, Nov 7, 2009 at 7:56 AM, Bill Lear <[email protected]> wrote: > The remarks cited do not really tell us how computerized trading can > be dangerous, and what "improper trades" really are. It's clear that > unfair access is a problem, but that doesn't say how computer trading > per se is bad.
The improper trades are basically trades based on front-running retail traders using high-speed, low-latency computers. This is a loop-hole - front-running is illegal except apparently when done with computers within a half-second or so. You'd imagine that any advantage in HFT would be arbitraged away via vanishing bid-ask spreads as more firms try to profit from it, but so far that hasn't happened because (a) there are only a small number of players who do this in a big way and (b) these players are aggressively engaging in an arms race by using faster and faster computers and strategies such as "co-locating" their servers at the exchange. http://advancedtrading.com/algorithms/showArticle.jhtml?articleID=218401501 -raghu. -- Puritanism: The haunting fear that someone, somewhere may be happy. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
