Explain Like I'm Five

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143

ELI5: Why is high frequency trading allowed? (lemmy.ca)

submitted 2 months ago by Eiri@lemmy.ca to c/explainlikeimfive@lemmy.world

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I don't see how it's a benefit to capitalism or companies or, well, anyone, really, to allow people to make thousands of trades a day for minute profits on each.

My gut feeling is that the stock market would not suffer, and less resources would be wasted, if trades and updates to stock prices were limited to, say, one batch per hour.

There are probably reasons the system is the way it is though.

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[–] RoidingOldMan@lemmy.world 8 points 2 months ago (1 children)

Trades once per hour? But that would be fair for everyone, can't have that. People pay thousands or millions to get stock prices 30 seconds faster, because there are fortunes to be made with 30 seconds of advantage.

[–] perviouslyiner@lemmy.world 17 points 2 months ago* (last edited 2 months ago) (1 children)

30 seconds? Some exchanges have to measure the cables to prevent customers from getting a microsecond advantage!

[–] MutilationWave@lemmy.world 2 points 2 months ago

A company ran a new fiber line under the goddamn Atlantic Ocean from London to New York so London traders could trade a fraction of a second faster.