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May 26

Flash Order

Posted by bo at 23:06 | Others | Comments(0) | Reads(7957)
The stock market is a mess of people one-upping other people constantly. Any chance to get an advantage is seized immediately and one of those opportunities lies in the so called “Flash” Orders. In a brief summary, a flash order is a brief glimpses (no more than milliseconds) of someone else’s exchanges. Of course, only high-speed computers can see these, but once they are seen, they can be used to get a leg up and buy or sell ahead of others.
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Some regard this as an unfair advantage as professional traders would gain advance knowledge on trends before individual buyers. Others say that it adds ‘liquidity’ to the stock market. This opinion comes, of course, from the big businesses who are using the flash order service to their advantage to gain a  profit. The problem is in the shifts that this brings about. For example, the big business might buy all of a certain stock, and then sell it for a bit more than they bought it, but a penny less than what the next guy is offering it for. This advantage causes motion in a violent manner in ways that would not be present in normal conditions. While this can for a time be a benefit, it means it can also fall just as quickly.

Another big gripe is that the High Frequency Trading can really mess people over. Those with a leg up can make an investment risk-free, and it is only risk-free for them because all of the risk falls on to the lower tier. So far, it has upset enough people to be at risk for banning. The stock market has become a beast to be weary of these days. If this unfair advantage doesn’t go, what’s to ensure equality in the future? Fortunately the flash order business will very likely be taken away as more than a few well-placed officials have been given varitable heebie-jeebies from this mess. Hopefully order will  soon come out of this chaos.

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