New Members: Be sure to confirm your email address by clicking on the link that was sent to your email inbox. You will not be able to post messages until you click that link.
"Flash Boys" is the market rigged
Having just read Flash Boys by Micheal Lewis I am wondering what stockcharts.com members think of these revelations.
I am not familiar with "Flash Boys" or Michael Lewis. However, I would like to comment on the terms "rigged" and "flash". One item in Dow Theory states that "the general direction of the primary trend is not determined by actions of big participants, but rather natural movements of the market as a whole." Also, Chip says to trust the charts and not the talking heads in the news.
I suspect that HST may have played a role in the Flash Crash a couple of years ago. The market recovered quickly, but maybe investors were wronged because of stop losses? I cannot remember, but I think steps were taken to restore some of these positions.
I also think, but not sure, that HST has increased liquidity just like markd says. This generally would be a good thing.
Other than that my 2 cts is that this is simply a result of advancing technologies. 20-30 years ago traders/brokers/investors/etc. could have an advantage over others by simply keeping a (very very expensive trans-atlantic) telephone line open and trade/arbitrage away the differences between the same stock listed on two different exchanges like ADRs on US exchange and the real stock on European exchange for example. We were talking minutes at that time.
The technology has changed and now we do not need telephone lines and humans any more to spot the difference, report it and eventually trade it with the process taking minutes. This is now all done by a computer and fast connections in sub-milliseconds time frames. I'm not sure if that is rigged or rigging...? Nobody will stop anybody to make the same massive investment in technology and brain-power for good programmers and get in the game ....