Inside High Frequency Trading: Algorithms, Not Markets, Lead to Wall Street Riches
Here is the opening of this article on HFT from Inverse, which is mostly and interview:
A trade that makes a penny is a win. And with the number of trades the algorithms and processors driving high frequency trading shops are making per minute, days are full of wins and coffers are overflowing with pennies. High frequency trading may not be a new phenomenon, but these coder collectives are steadily making markets either smarter than the people who purport to understand them or way, way dumber. It depends on who you ask.
If you ask Brad Katsuyama, the founder of IEX and a major character in Michael Lewis’s best-selling book Flash Boys, HFT is rendering markets ridiculous. This is why Katsuyama has promised to coil 38 miles of non-metaphorical cable between traders and the servers of his potential exchange, which is still waiting for the SEC go-ahead before listing companies. This would result in a 350-microsecond ”speed bump” designed to diminish the high-frequency advantage.
Katsuyama has a fair number of cheerleaders because a lot of people within the financial sector would like to see high frequency traders subjected to a speed limit.
Still, within the confines of HFT firms, coders, statisticians, and so-called “quants” toil in well-compensated obscurity. Things are pretty much as they have been.Inverse spoke with a trader, who wished to remain anonymous due to potential personal ramifications, about the potential end of high frequency trading and the moral questions it poses.
Katsuyama is right and if you read the interview which follows this introduction above, I doubt that you will find it reassuring.
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