Pundits have been complaining lately about evil investors (very big investors) who use high-frequency trading to gain an edge that (1) is unavailable to the average investor and (2) does not serve any conceivable capitalist purpose.

So this invention is simply: Make it available to the average investor. A retail brokerage introduces a program that offers "trades executed at better prices" by offering a menu of the same sneaky techniques the big boys use (like flash trades). Either these tactics will be available to everyone, or the markets will introduce rules to eliminate them.
-- joee, Aug 26 2009

(?) High Frequency Trading Is A Scam http://market-ticke...ding-Is-A-Scam.html
blogger complains about HFT [joee, Aug 26 2009]

I see a frequency-war ensuing; differing financial houses competing at ever-faster frequencies to pick up the edge, pushing the limits of predictive computational servers in a bandwidth war to rival Intel/AMD, and a whole new paradigm of the Financial equivalent of Moore's Law coming into play.
-- RayfordSteele, Aug 27 2009


Why not auction the shares? The problem with high frequency trading, as the article describes, is that a fast computer gets the trade, rather than the best offer. Auctions allow no such cheating. You either make the best offer or someone else gets it.
-- Bad Jim, Aug 30 2009


Switching to an auction model or adding a time delay to each trade sounds like a great solution. I don't know the subtleties of stock exchange rules or economic theory and practice well enough to say.

The crux of my idea is that it's a cheap way to add fuel to the frequency war that already exists. This will reduce the time it takes for the practical-minded folks who set exchange policy to institute whichever rule makes the most sense. And then we can use all those supercomputer cycles to make decisions that serve a conceivable capitalist purpose.
-- joee, Sep 25 2009



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