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Aug 3, 2015
8:02:19pm
I have mixed feelings about HFT
Rapid trading has had the benefit of reducing quoted spreads. Today, popular stocks trade with a bid-ask spread of 1 cent. This is possible because "computer" buyers and sellers are competing to make a trade. 20 years ago I believe the minimum spread was 12.5 cents

The downside of HFT is that liquidity is an illusion. There is no guarantee a bid will be made on a stock when a sale needs to be made. That said the buyers and sellers of large blocks of stocks know that such trades need to be done skillfully and this may preclude posting the bid or ask on the open market.

I favor regulation on open market transactions that would require all bids and asks to remain open for some minimum time period, maybe 1-second, maybe 5-seconds. This would help reduce phantom pricing where prices are only made available for a fleeting moment.
Busiturtle
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danwut
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Busiturtle
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