Sunday, July 26, 2009

Understanding High Frequency Trading

Goldman Sachs and others have been using computer programs to do what they call "High Frequency Trading." It is pretty much front running. The Ticker Guy does an excellent job in the video below of explaining HFT and front running. I don't agree with him that the trades create longer term movements in the market-- maybe some trading from momentum traders, but this isn't about long term impact. It's much more similar to the guy who programs a computer at the bank where he works to take a penny out of each account at the end of the month. It is not something most will not notice, but those pennies add up for the penny grabber.


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