Re:High Frequency Trading and Finance's Race to Irrelevance
by dragontamer on Thursday June 05, 2014 @06:00PM
(#7854873)
HFT of type #1 means that you can go to any market and roughly get the same deal.
IE: You can purchase a stock in Euros in some European exchange, OR you can purchase a stock in Dollars on the NYSE. In both cases, you get the same value.
This equivalence in value only exists because traders perform arbitrage on fractions of a penny over the course of milliseconds. And thanks to HFTs, any divergence in value larger than a penny or so is arbitraged away within miliseconds.
This is a solid service for all involved, and HFTs are the ones who take the risks behind arbitrage. (IE: if the markets move in an unpredictable way)
IE: You can purchase a stock in Euros in some European exchange, OR you can purchase a stock in Dollars on the NYSE. In both cases, you get the same value.
This equivalence in value only exists because traders perform arbitrage on fractions of a penny over the course of milliseconds. And thanks to HFTs, any divergence in value larger than a penny or so is arbitraged away within miliseconds.
This is a solid service for all involved, and HFTs are the ones who take the risks behind arbitrage. (IE: if the markets move in an unpredictable way)