How to keep High Frequency Traders (HFT) Out of Your Pocket

Michael Lewis’ new book Flash boys, out a few weeks ago, made a huge splash attracting attention of the FBI, regulators, and numerous print, and media outlets. We have a neutral view on the subject, here is why.

How to Keep HFT’s out of your pocket

Most of the discussions and illustrations include an unfair advantage gained by open access and speed obtained by the HFT’s. While this may be true there are two simple solutions.

  1. Do not trade excessively – Trading constantly opens one up to excessive HFT tricks. We would argue excessive trading is bad for investors and should be avoided.
  2. Meet the Limit Order – Do not buy anything in the open market as a market order. If you set the maximum price of what you will pay/take (limit order) , you have set your boundary price.Catfish

HFT’s which we will call for this discussion “Catfish” can get into your pocket if you are not careful, but these two steps will keep you out of harms way.

In closing, we have named HFT’s “Catfish” as they scour the bottoms of the trading floors for crumbs and score from the unaware. Shortly we will discuss a more frightening power we call “SKYNET“, which we think deserves more attention.

Have a great day!

John Kvale CFA CFP

PS Short week, such the consecutive day posts.
PSS Tax day today!!
8222 Douglas Ave # 590
Dallas, TX 75225  

One response to “How to keep High Frequency Traders (HFT) Out of Your Pocket

  1. Pingback: Algo’s aka SKYNET, A Bigger Problem than High Frequency Trading | $treet-¢ents

Leave a Reply