this post was submitted on 31 Aug 2024
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Explain Like I'm Five

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ELI5: Why is high frequency trading allowed? (lemmy.ca)
submitted 3 months ago by Eiri@lemmy.ca to c/explainlikeimfive@lemmy.world
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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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[–] Magister@lemmy.world 22 points 3 months ago

I know people who do HFT cards, it's FPGA decoding ethernet packet when they enter, and send the answer at the same time, when the bytes for price enter, FPGA algorithm takes decision in a few nanoseconds to output the byte for buy or sell. It does this millions times per second