this post was submitted on 31 Aug 2024
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Explain Like I'm Five

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ELI5: Why is high frequency trading allowed? (lemmy.ca)
submitted 2 months ago by Eiri@lemmy.ca to c/explainlikeimfive@lemmy.world
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I don't see how it's a benefit to capitalism or companies or, well, anyone, really, to allow people to make thousands of trades a day for minute profits on each.

My gut feeling is that the stock market would not suffer, and less resources would be wasted, if trades and updates to stock prices were limited to, say, one batch per hour.

There are probably reasons the system is the way it is though.

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[–] lurch@sh.itjust.works 5 points 2 months ago* (last edited 2 months ago)

it's not guaranteed they make profits. HFT is a huge gamble, like all stock trading, but the stakes are even higher, because they can spend more with that higher frequency.