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TRADING ALGOS DOMINATE MARKETS

|Includes: BA, DBA, DBB, DJP, DVY, EEM, EFA, EPI, EWA, EWC, EWJ, EWZ, FCG, FXE, FXF, FXI, GAZ, IBB, IEF, IEV, ILF, iShares Russell 2000 ETF (IWM), IYR, IYT, JJG, MOO, QQQ, RSX, TIP, TLT, UDN, USL, UTX, XLB, XLE, XLF, XLI, XLU, XLV, XME, XRT

 
 

It's been common knowledge for several years that HFTs (High Frequency Traders) are dominating trading. They represent roughly 70% or more of trading volume on the NYSE. They're armed with sophisticated algos (algorithms) and operate at extremely high rates of speed. Like our famous friend HAL, they can make some mistakes -- a la the May 2010 "flash crash," which is already quickly forgotten. Some algos compete with one another and/or copy each other's movements. Because they operate in milliseconds, firms using these systems need to be physically close to the exchange for optimal performance...READ MORE

 


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