High frequency trading crude oil,foreign currency exchange market supply and demand,best option trading strategies by return,buying stocks online without broker - PDF 2016

Simply put, when stock volume is high and transactions increase, the bid-ask spread narrows. As I said earlier, price discovery has become much more difficult in recent years because of growing high-frequency trading (HFT), dark pools and non-exchange trading—all of which have changed, perhaps irreversibly so, the formation of capital in the investment industry. These challenges are directly attributable to the infiltration of high-frequency traders into the market, not to mention the expansion of dark pools and non-exchange trading. Decisions to buy or sell a company are first fundamentally driven, and then trading is based on statistical analysis of fund flows, volatility over different time periods and relative performance to the gold indices we strive to beat. Accounting for more than 30 percent of trading volume in the markets, some ETFs are influencing the markets they track and impacting their underlying holdings.

In a process called latency arbitrage, high-speed traders are able to gain access to crucial order information and other market data milliseconds before “normal” or “slow” traders. Often gains are less than a penny per share, but because they trade so frequently and rapidly, it’s easy to make fast money. Like thieves in the night, high-speed traders can swoop in to a market that you created and take advantage of it.
But an increasing number of large investors are using these exclusive pipelines to (allegedly) hide and protect their transactions from high-speed traders. The inclusion or exclusion of a stock in the underlying index can result in a flurry of disruptive trading unrelated to changes in the company’s fundamentals.

If you weren’t watching closely you could have missed the entire event… Shares of Procter & Gamble, for instance, traded as low as a penny and as high as $100,000. In recent years, non-exchange trading has surged, accounting for close to half of all stock trades today.

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