In what can only be described as a market hit piece, the equities sector as rigged, claiming that high-frequency trading is used by powerful investment firms and banks, including the exchanges themselves, to gain an insurmountable advantage over the commoners. High-frequency traders, big Wall Street firms and stock exchanges have burned through billions to pick up favorable position of a millisecond for themselves and their clients. Just to get a look at stock market costs and requests a glimmer before every other person; alongside the chance to follow up on it.
The insiders are able to move faster than you. They are able to see your order and play it against other orders in ways you don’t understand. The problem, however, is that the mere existence of high-frequency trading does not definitely prove market manipulation. At its core, the definition of HFT is the use of algorithms to make trades based on a given set of logical functions.
Since these complex algorithms require advanced computer technology, the process by default is incredibly quick, often accomplishing in minutes tasks that would take a human trader several hours to perform. The distinction is important to remember because it’s not the tail that wags the dog: in other words, the ability to make fast trades is not immoral, nor is it illegal.
Further, it would be extraordinarily difficult to police such technology and it would reek of hypocrisy. The advent of the internet has allowed for digital trading to be the norm and the trajectory of the markets, whether you like it or not, is towards increased digitization and less human interaction. Of course, some of the critics of HFT will cite commodities manipulation as one of the dubious “beneficiaries” of the Algorithm Era, with the precious metals complex taking another hit on due to technical selling pressure off the backs of a stronger U.S dollar index.
Gold came off slightly from the prior session, down a quarter of a percent, while silver received an inordinate blow, losing eight-tenths of a percent. However, the platinum group metals have performed relatively well this year and bucked the trend this week, posting modest gains.