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It is impossible to make anything foolproof because fools are so ingenious.

Ralph Waldo Emerson

Flash Boys by Michael Lewis is another example of great investigation and writing, but another disturbing view of Wall Street taking pennies out of every pocket. Similar to the salami fraud technique of slicing a bit off from each transaction, high frequency trading (HFT) enabled by the broker establishment are similarly fleecing individual investors out of a penny on each share traded. The middle men are gaming the system ... which is paid for by the individual investor.

Citadel Securities, KCG Americas LLC, DirectEdge ECN (EDGX), Nasdaq Execution Services, Citigroup Global Markets, G1 Execution Services


Personal trading

Looking for that personal solution? How to not get ripped off by HFT Place a limit order at the BUY price. Or help to make the market move by going 1 cent higher than the BUY price. Don't (DON'T!!) let the HFT make the spread and pay for taking liquidity. (see the NASDAQ price list for trading connectivity fees / rebates.

Chis Stucchio, the author of the article referenced above, has a very well organized explanation of how HFT works at http://www.chrisstucchio.com/blog/2012/hft_apology.html , http://www.chrisstucchio.com/blog/2012/hft_apology2.html , and http://www.chrisstucchio.com/blog/2012/hft_whats_broken.html


Another perspective on HFT

Joe Stiglitz, Nobel prize-winning economist at the Atlanta Fed’s 2014 Financial Markets Conference in April 2014

The hanging thread ... as Flash Boys ends with a reference to a microwave tower in Pennsylvania with the FCC license number 1215095

The application to use the tower to send a microwave signal had been filed in July 2012, and it had been filed by … well, it isn’t possible to keep any of this secret anymore. A day’s journey in cyberspace would lead anyone who wished to know it into another incredible but true Wall Street story of hypocrisy and secrecy and the endless quest by human beings to gain a certain edge in an uncertain world. All that one needed to discover the truth about the tower was the desire to know it.

You can't recycle bowling balls.

NPR - Planet Money, 3/27/2015

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