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Well, duh! The FBI investigates these type of questionable trading strategy that HFT use to rip off traders

(Last Updated On: April 18, 2014)

Well, duh!  The FBI investigates these type of questionable trading strategy that HFT use to rip off traders

Well, duh! The only thing shocking is that it’s taken the FBI a year and the investigation is still ongoing. Other practices under investigation have become part of the HFT lexicon, including, courtesy of Zerohedge:

Subpennying. Providing a “better” bid or offer in a fraction of a penny to force the underlying order to move up or down.
Quote stuffing. The trader sends a huge number of orders and cancels them, which is a lot like the guy who orders a dozen pizzas and never shows up to pick them up. This maneuver slows down the market and allows the trader to outfox ordinary investors who place trades based on stale data.

Quote stuffing. The trader sends a huge number of orders and cancels them, which is a lot like the guy who orders a dozen pizzas and never shows up to pick them up. This maneuver slows down the market and allows the trader to outfox ordinary investors who place trades based on stale data.
Layering. The trader places multiple sell orders to drive a stock price down, and then scoops up the stock at an artificially low price.
Order book fade. Lightning-fast reactions to news leads to disappearing liquidity because the trader has scarfed up all the desirable shares.
Momentum ignition. An HFT trader detects a large order targeting a percentage of volume, and front-runs it.
We doubt that such practices make markets more efficient, but if they do, we’d be better off with inefficient markets.

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Speed Trading Does Rig Markets via Morningstar
By AdviceIQ
Apr 16,2014 11:20 AM

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