high frequency trading and its impact on the nasdaq/nyse

chibiks

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Hi,

I am a new trader and have read that up to 70% of all market activity is high frequency trading... so what is the impact of this on stock traders both positive and negative...
 
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Hi,

I am a new trader and have read that up to 70% of all market activity is high frequency trading... so what is the impact of this on stock traders both positive and negative...

Volatility, spikes and noise. More damaging is the potential aggregate aberration driven by convergence of events that in retrospect is best sums up as "oops - we didn't see that coming".
 
Hi,

I am a new trader and have read that up to 70% of all market activity is high frequency trading... so what is the impact of this on stock traders both positive and negative...

HFT , used mostly by institutions, does indeed make up a large amount of trading volumes in the twenty first century with several impacts. Volumes are obviously higher, with orders automatically generated depending on how the computer (algorithm) interprets the markets. Pricing discrepancies are few and far between, computers quickly acting to profit from them. The algorithms can break up orders into tiny fractions and buy and sell to avoid their real intentions being unmasked, something which has seen the birth of HFT hunting - computers trying to work out what other computers are doing. HFT has been accused of exacerbating problem moves in the market. If someone makes a fat finger trade (mistake) this can be interpreted as a real trade and the computer acts immediately. There is no human thinking like (that can’t be right). Moves are often very quick. Things can become quite predictable at major levels of support and resistance, however, analysis of orders can also see levels tested a bit more and stops triggered at what would normally be considered a level offering enough breathing space. They are good in keeping the market moving and interesting, but they have many critics. Swings and roundabouts. Not sure what the breakup is among asset classes, That’s be interesting. More in FX which is itself the biggest market in the world.
 
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