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Reading Flash Boys by Michael Lewis. High Frequency trading. Fascinating so far, but really really scary. Find out what happens after you hit the "buy" or "sell" button. You think you know??? It's beyond your wildest imagination!
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Seriously, if you haven't read Flash Boys, you should! Here's a follow-up. Quotation of the Day
"We have a life boat in IEX in the rough seas filled with sharks."
- Edwin James Boyce, an individual investor in North Carolina, writing to the S.E.C. -
I'm now reading it for the THIRD time. My market knowledge is getting better and better. I have realized now that I have unwittingly participated in a "dark pool." My (incognito) large broker at one time would offer me my 100 shares buy order from the "house" supply of the particular stock for "a lower price than the market."Originally posted by riverbabe View Post
I see the evidence of front running every day on my computer screen! Trust me, you do too! Ever put in a bid and watch the price rise by a penny and then keep chasing it as it keeps eluding you penny after penny? And this is all possible because of microseconds and nanoseconds, the differences in the times it takes your order (when you hit the send button) to reach the different exchanges. And the microseconds and nanoseconds depend on the geographic configuration of the different routes the fiberoptic cables take to the different exchanges. And the HFTs take advantage of this to front run your order with a different exchange. Actually it's all pretty clear in the book.
Now that IEX is open for business, I decided it was time to read this book again. Am I happy I did! Disclaimer: I have absolutely no connection, conflicts or interests with regard to this book, its author or publisher, or anyone or entity connected to it. I am simply recommending it to my friends here on the Mr. Huge forum because I find it to be fascinating reading (especially on my Kindle at lunch with a martini), and I believe you will too.Comment
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Fascinating stuff. I have older relatives who say that back in the day Martin Zweig used to complain about NYSE specialists getting rich off Zweig subscribers who placed market orders for his recommended stocks so the mechanics have changed but problems, or ones like them, remain.Originally posted by riverbabe View PostComment
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Embracing an idea it has previously resisted, the New York Stock Exchange (NYSE:ICE) is trying to introduce a "speed bump" for some stocks. The NYSE will ask the SEC to allow for a 350-microsecond delay for small- to mid-cap companies that trade on what was formerly called the American Stock Exchange. The speed bump was first introduced by IEX, the venue that rose to prominence after the publication of Michael Lewis' "Flash Boys." (SA 1/26/17)Comment
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River, I recently put in a buy order for a stock between the bid and the ask price. They wouldn't allow the order telling me it had to be in .05 increments. I've done it before. Is this a relatively new rule? It takes the fun out of chase.
---------------billyComment
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