High-Frequency Trading

Jun 5, 2011
J. Webster
Comments Off on High-Frequency Trading

Good piece from 60 Minutes: Steve Kroft gets a rare look inside the secretive world “high-frequency trading,” a controversial technique the SEC is scrutinizing in which computers can make thousands of stock trades in less than a second.

An amazing stat: 70% of all the trades in the United States are done by high-frequency trades. These are traders who don’t care about the companies balance sheet or what they do. They’re using statistics and probabilities to make small profits on millions of trades. The valuation of a company is irrelevant.

What’s more, the May 6th flash crash was due in large part to high speed trades. The big question, is the stock market rigged?

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