Flash Boys: A Wall Street Revolt

Author: Michael Lewis
4.5
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Flash Boys: A Wall Street Revolt

4.5

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by guiambros   2018-09-14
It means they are handing over your transaction to HFTs, who can then see your transactions ahead of everyone, and buy the stock right before and then sell to you for a higher price. Imagine you just issued a BUY order at market price; they can buy at $99.9 and sell to you for $100, making a $0.01/stock profit. Rinse and repeat millions of times per day.

This is very similar to "front running" [1], but because a) this happens privately and in small quantities, and b) it is not necessarily privileged information, it's considered legal by the SEC. But it is highly questionable for sure.

"Flash Boys", by Michael Lewis [2] is a great read, and goes into detail on the world of high frequency traders, and how they operate.

[1] https://www.amazon.com/Flash-Boys-Wall-Street-Revolt/dp/0393...