Did you realize that according to some estimates, the so-called high-frequency trading (HFT) makes 70% of daily volume in the U.S. market for stocks? In fact, trading in computers and HFT is to blame for the flash falls 2010.DIP ordered measures to prevent future flash drop like that one, so you can clearly see the SEC HFT as a risk to the structure of electronic trading. Do you believe that the game is rigged and there is no way to make money trading stocks? Well it's simply not true.
In the early days of the market (the early 1800s to the 1960s), before trading computer, all orders are processed in an open outcry and / or expert system and processed through the pen and papir.Kupaca who want to buy shares called his brokera.Broker would then call up a trading room, which in turn called the dealer, or a replacement for the execution of orders. The process may take 5 to 10 minutes or even more! By the time the customer got his order is filled, the execution many times was very different from what he expected. Back in those days was not unusual that some people take the middle piece. Even in the period immediately before the Internet, brokerage firms could take a few minutes to make a market order and the so-called market makers can literally glide fractions of dollars as a Vegas takes VIG.
Once the internet took off and the fractions were eliminated, information on prices become more transparent and spreads between bid and ask tightened considerably. Online brokerage firms sprang up and order execution in seconds. The invention of high-speed trading computer is an absolute must for traders. Commissions fell to almost zero and 90% of the market makers went looking for a new job. I know because I was a stock broker at the time,. Second half of the 1990s and the early 2000s
On the basis of internet trading and computers have cut VIG to zero! Price performance is not measured in milliseconds. So, where HF traders come into the picture? They are the new market makers. In fact its actually facilitate the execution of algorithms instead of hurt. So the market rigged? Compare to last in the market is much more transparent than it used to be. Did HF traders cause flash crash? There NYSE with its lack of oversight caused it.
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