Explain Like I'm Five

14296 readers

1 users here now

Simplifying Complexity, One Answer at a Time!

Rules

Be respectful and inclusive.
No harassment, hate speech, or trolling.
Engage in constructive discussions.
Share relevant content.
Follow guidelines and moderators' instructions.
Use appropriate language and tone.
Report violations.
Foster a continuous learning environment.

founded 1 year ago

MODERATORS

[email protected]

106

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

submitted 2 months ago by [email protected] to c/[email protected]

34 comments fedilink hide all child comments

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.

you are viewing a single comment's thread
view the rest of the comments

[–] [email protected] 2 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.

[–] [email protected] 12 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!

[–] [email protected] 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.