Explain Like I'm Five

14235 readers

3 users here now

Simplifying Complexity, One Answer at a Time!

Rules

Be respectful and inclusive.
No harassment, hate speech, or trolling.
Engage in constructive discussions.
Share relevant content.
Follow guidelines and moderators' instructions.
Use appropriate language and tone.
Report violations.
Foster a continuous learning environment.

founded 1 year ago

MODERATORS

[email protected]

143

ELI5: Why is high frequency trading allowed? (lemmy.ca)

submitted 2 months ago by [email protected] to c/[email protected]

29 comments fedilink hide all child comments

I don't see how it's a benefit to capitalism or companies or, well, anyone, really, to allow people to make thousands of trades a day for minute profits on each.

My gut feeling is that the stock market would not suffer, and less resources would be wasted, if trades and updates to stock prices were limited to, say, one batch per hour.

There are probably reasons the system is the way it is though.

you are viewing a single comment's thread
view the rest of the comments

[–] [email protected] 3 points 2 months ago

That sort of limited trading does happen for some very niche products that don’t have a lot of potential buyers and sellers.

It's actually way more common than you'd think. Trading is frequently internalized in order to maximize arbitration profits.