I don't read it that way. I take it as an insistence that basic supply and demand decide the price. This means no millisecond-level attempts to outsmart the other guy.

So for example you want to buy a million shares starting at $9.00 and this naturally moves the price up to $9.20 based on what everyone is offering. You're okay with that, but you are not okay with someone intercepting mid-purchase, buying a whole bunch of shares that were between $9.02 and $9.15, and instantly selling them back to you at $9.18.

Maybe I'm being too generous in my interpretation of "not moving the price", but this is the effect you get when you disguise your purchase. Only the actual demand affects the price. So I think that's what the real meaning is.

Your read is skewed by a common but incorrect perception about the way the markets operate.

You see it as party A wants to trade with party B and party C steps into the middle of the transaction to extract money from the transaction that they have no right to.

What is in fact happening is that party A wants to trade with party B over and over again at the same price and party B wants to change their price based on these interactions.

The later is what is actually happening (in greatly simplified form) and it is the mechanic by which the market goes from $9.00 to $9.20.

Further, large block traders absolutely positively hate that it goes up no matter how it happens, because their whole trade is based on finding a market price inefficiency. The longer it remains, they longer they profit. If they could, they would make it a law that prices of transactions couldn't be shared.

In this scenario it's okay for B to change their price based on "sold some, bump the price based on supply". It's not okay for B to change their price even more based on tracking A's actions. So you treat trades as independent, and there would be no benefit from hiding the fact that you're trading.

This means the price smoothly curves up from $9.00 to $9.20, it doesn't instantly jump to $9.19 or $9.27 because B figures out how much A is willing to pay.

I'm not going to comment on how realistic such a principle is.

Again, I think that you are misunderstanding the way the exchanges work. Party B is not doing anything but watching 1) The trades that are public information available to anyone (ie his peers) and 2) his specific interactions with the market and in some rare cases 3) the orders going into the exchange that are public to everyone.

Party B is then inferring things about supply/demand patterns. He is not tracking a specific entity. Party A meanwhile is doing everything in his power to hide his large intentions (trading across multiple venues, with different executors, at different times, at different sizes, etc). This natural adversarial relationship is what causes the price to go from 9 to 9.20 and it does not instantly jump, it is smooth. This is the mechanic for how that smoothness occurs and happens in real life and needn't add any impossible principles to the mix for it to occur.

In either case, Party A is unhappy about it jumping. They want it at 9 for as long as they can charge it, and Party B wants to maximize the average price they can sell it at (that is it is better for them to continue selling at 9.18 than to scare everyone off at 9.20).

Let me put it in more fundamental terms. Note this quote from the article:

They break their orders into smaller pieces, and build (or rent from their brokers) algorithms to make their big orders harder to spot and less likely to move markets. John Arnold "spent millions of dollars developing a proprietary order-entry system to disguise and conceal strategies from external algorithms."

The "ideal" is that this would not be necessary. That this would provide no advantage, because markets would never try to spot "large intentions". Party B would not temporarily set a price that is less profitable for selling small numbers and more profitable for selling large numbers.

Markets don't need immediate higher-order feedback to be efficient.

And again, don't ask me how you would stop anyone.

It sounds like you think orders are executed atomically; that if you put in a sell order for 10,000 shares, 10,000 shares are sold all at once. That's of course not how it works. Even if you don't split your order up into smaller ones deliberately, it is still going to be filled piecemeal by lots of small buy orders. And that's not going to happen all at once either.

If you have 10,000 shares that you want to sell, and you want to sell them all at a specific price, there is a simple mechanism to do that: enter a limit sell order.

I'm aware it's not atomic. There wouldn't be time to react if it was atomic.