Wednesday, January 15, 2014

Trading the exchanges

High frequency trading has become the normal way for a large amount of stocks started by technological developments in investing. Automation that eliminated the use of specialists on the floor of the New York Stock Exchange and eliminated arbitrage opportunities for brokers and day traders has went through the world's financial centers like crazy. Some of the most recent uproar has started around  anonymous trading areas which don't show bids and offers.
These areas allow investors to make big trades without broadcasting their positions since the very act of bidding or selling publicly would change the price of a stock on an exchange.  But traders who think  this style of  trading hasn't been happening a long time is deluding themselves. Both market conditions and increased automation make it easier for traders to make trades outside of the stock markets, where prices of securities are shown during the day. But in reality, automation has now empowered threats to the old exchanges' dominance. More than anything, this has been generated by a feud between exchanges and brokerages for fees and the first site at information. The largets stockholders have long been able to trade while hidden from view. A 1993 New York Stock Exchange working paper described the practice  trading big "blocks" of stocks .
New York Stock Exchange