Explain Like I'm Five

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

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

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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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[–] [email protected] 2 points 2 months ago

I know the theory. In essense, the stock market (I was told) should predict the performance, strenth or beneficiality of a corp, but I guess that's wrong.

Also, by this measure a tree in the forest is worth nothing, but a cut and tree, and the land that it leaves behind are worth a lot. Teachers, nurses and "non skilled" workers are worth almost nothing, but market brokers are worth a lot.