Week 4 Discussion Board.docx - How does HFT affect the...

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How does HFT affect the market?Is HFT illegal? Unethical?Do you believe that the stock market is efficient?How do you feel about investing in the stock market now?High Frequency Trading (HFT) is affecting the market in several ways. By analyzing the data that is presented, the algorithms that are driving the way the data is interpreted can make ‘predictions’ on how a stock will perform, which in turn, allows the company to buy or sell stocks that meet a predetermined set of values. These trades are also extremely small in nature, so it is not for a single trade of bulk stock, or investors in companies, but for what is known as penny traders. These trades, which may only exist for several milliseconds, are only valued at a penny or lower, and most of the time, fractions of a penny, but if you can perform this type of trading over millions of purchases in a day, you can make a large sum of money. This also has the effect of showing an increase in volume of trading for stocks as well, which could in turn show a favorable forecast for the average investor, which may, or may not, be factual, but could ultimately affect the perception of a company on the world stage.HFT is not illegal or unethical, but it does have the sense of bad business. There are distinct advantages that companies that are participating in HFT have over the average investor, but this type of data-mining and predictive algorithms come at a high cost. Because somebody is investing in new technology, it does not mean that they are performing illegal actions, and if theyare willing to invest millions in this kind of operation, and the managing authority (NYSE) does not see this as an issue, then the ethical question is answered as well. The NYSE is even offering colocations services for these type of HFT to be as close to the stock exchange as possible. Colocation in Mahwah offers participants the most direct route to the NYSE Group market data and trading venues (NYSE, 2017). The NYSE knows this is the new technology, and how stocks

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