September 7, 2012 § Leave a comment
Too busy for the early takes on Kimalot at RNZ this morning I dialed in post 9am.
A fellow named Toby Man-4-hire (I think, cos like I say the intros flew by me) and lo and behold some author(writer) on about what he termed the Octopus.. and which I’ll opine some Tea Party people will deem the hydra-headed.
Yet the SECRET of which was said to be “front running” traders. Guys alleged with big fast computers able to game the buy/sell process and so enabled ahead of stock movements. Insiders stupid!
Well, do I have some news for him and any listeners to RNZ who heard the above novel gambit.
Front-running is no more nor less than a variation on HFT, or high frequency trading. This is possible stateside because a will and way(players/game) can exist where financial regulation is frowned upon. Or, put another way, self-administered 😉
HFT involves multiple same stock trades on and off parties exchange between private players ( club membership-like ), and not the more usual single trade a day of public exchanges. Resulting in not so much inside track trading as private/public competitive enterprise between like-minded individuals(or parties) and slower large traditional asset-managed investment strategies. HFT units are now established viable hedge fund entities and/or agencies.
Results of this are less exchange trading volumes and fees, and less(lower/no regulation), thusly making for old time risk mandates. Rewards from mainly midsize US company stock trades.
FYI high frequency trading works best for its operators not from stock price gains but from discounting both sides of any trade. When doing the biz 60/24/7 ( some honor a day off and so we could substitute a 6 for the 7 ) this process can truly leverage day takings. Add, shall I, that minimum trades circa $2 millon for main parties is a useful aid to accumulators..
Describing the novel as “gob-smackingly” good had me consider an email to RNZ yet as you see a proper explanation would appear overlong, and perhaps critical of the so-smacked. Nor, In responding, am I to be taken as playing devil’s advocate.
Let us hope this blog gets through, does its job and finally, thanks show producer/presenters for their effort of bringing the fare to their listeners’ table.