A Recap of Bloomberg’s Inside Look at High Frequency Trading

Bloomberg nasdaq, At 4 pm EST we\'ll be live on a o Bloomberg and CNB…

Bloomberg nasdaq, At 4 pm EST we\’ll be live on a o Bloomberg and CNB…—Marc van der Chijs (Flickr.com)

Bloomberg is considered one of the most popular business networks around the globe; it has programs that will cater to any type of business and have special shows that focus on the stock market and analyzing stock market data. High frequency trading has been considered the fastest way to trade; with the lightning fast speeds of high frequency trading compared to traditional kinds of market trading, delivers fast and reliable results by the second.

Alfred Barkley was the President of NASDAQ in 1996 and since then he was able to study the market like the back of his hand. He talks about how high frequency trading has benefited stock exchange activity over the years. He is now the chairman of Pipeline Trading.   He explains that high frequency trading is actually an evolution of trading wherein high speed communications is now making data transferred and market data acquired faster than ever before.  High frequency translates to high speeds that execute faster than any human could ever make.

High frequency trading does not look for stocks to be bought for an extended period of time but for the least number of time possible for the best possible value. Actual imbalances are taken into consideration by hfts as opposed to studying a company for longer term portfolio time horizons

Technically, high frequency traders have the edge in stock market value determination with systems that can compute accurate predictions accurately by the millisecond. There is also nothing wrong with choosing to go with high frequency trading rather than traditional trading methods as well, as it is pointed out that it is not the technology that is the problem, but how it is used.

There is a rise in the number of high frequency trading and currently there are more trades made in this system than ever before. Approximately more than 70% of trades are made using high frequency trading which may also benefit exchanges allowing them to make profits as well.  Berkley believes that even with the rise of high frequency traders that offer faster data transfer speeds and more efficient investor features, consumers have to turn the tables around and take advantage of these systems themselves.

Recommendations from Berkley include making smart solutions when it comes to balancing out trading as well as coming up with transparency in the system to reduce negative speculations about high frequency trading. His company is currently developing new structures and new systems to help protect investors especially when they are investing their hard earned money like the 401k or their mutual savings.

Berkley also admitted to creating new alternatives like moving investors to a better algorithm and even having plans to determine if investors are caught in a “high frequency trading trap”. He predicts that as the number of high frequency traders rise, there will be more disadvantages for people who are holding on to their 401k. High frequency trading may be the future of the stock market, but may not benefit everyone who relies on it.

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