High-Speed Trading Isn’t About Efficiency—It’s About Cheating


BOOK REVIEW

Flash Boys, Author: Michael Lewis.

By Matthew O’Brien – It’s Wall Street at its most socially useless. HFT (high-frequency trading) funds aren’t allocating capital to where they think it’ll be most productive. HFT funds are allocating capital to where they think other people will put it 50 milliseconds from now. It’s a tax on everybody else. And it’s a tax that has basically no benefit. Sure, HFT funds defend themselves by saying they’re increasing liquidity, but increasing liquidity is the last refuge of bullshitters.

Economist Paul Samuelson [2, 3, 4] had it right all the way back in 1957: knowing (or trading) something one second before everyone else is personally profitable and socially pointless. more> http://tinyurl.com/mkg5643

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