Flash ‘Trading’ should be called Flash Robbery
By Daniel at 4 August, 2009, 2:26 pm
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It is no different than the proverbial computer programmer that siphons off the fraction of a penny from from the interest computation into his secret bank account.
Only in this case the programmer is the elite players (i.e. Goldman Sachs)… their program gives them a few extra milliseconds to ‘peek’ at order demand before execution and price movement.
When the program detects this condition, they sneak in their buy order (front running), and fractions of a second later after the price has bumped up, they ‘peek’ again and determine when the price is right to sell.
In a fraction of a second they have bought and sold at a guaranteed profit.
This can be done long or short, tens of thousands of times a day.
Just like minting money!
or in reality stealing tiny bits of money from millions of unsuspecting little guys… i.e. you and me.
Tyler Durden explains the details in this piece from July 22nd: http://seekingalpha.com/article/150397-flash-trading-goldman-sachs-front-running-everyone-else
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