High-Frequency Trading not really Wall Street's High-Speed Gambling

Aug. 27, 2012 - PRLog -- (August 20, 2012, New York) San Diego Reader’s Don Bauder tells the story of  the school janitor askinghim what his father did for a living. He said he was a stockbroker. The janitor said, “Oh, one of those gamblers.” The kid cried all the way home and told his mother what the janitor had said. She couldn’t stifle a laugh.

Now, 70 years later, Don thinks it was obvious that the janitor was prescient. About 75 percent of stock transactions in the United States are done through rapid-fire, computer-guided buying and selling, called high-frequency trading. A stock may be bought one second and sold the next. The firms trade all day for penny and nickel profits and then, generally, liquidate their positions at the end of the day. It’s day trading on steroids, involving billions of dollars.

In addition to high-frequency trading, there are other rapid-speed buy-sell games, such as those that occur on bank trading desks. As lightning-fast trading has come to dominate the market, small investors (who put money in mutual funds or buy individual stocks through brokerage houses) have little sway in market activity.
Indeed, the little guys and gals seem to be backing out of stocks. That’s not surprising, because old-style investors know that the Wall Street gambling game, like the one in Las Vegas, is rigged for the house. For example, the high-frequency trading machines can pick up information that has not yet shown up on the news screen. That smacks of front running, which is the unethical practice of a broker buying himself 1000 shares of a stock, knowing that his firm will shortly buy 500,000 shares of it.
Why practitioners and academics think this can’t be characterized as gambling will be explained at High Frequency Trading Leaders Forum 2012, this time in three of the world’s most important financial centers: New York, Chicago and London.

High Frequency Trading Leaders Forum 2012, How Knight Capital's 'Knightmare on Wall Street' Could Transform the Regulatory Landscape and Impact Investors, Speed Traders and Brokers", will provide attendees in New York, Chicago and London with the most up-to-date review of where this ever-changing industry stands and how new technology and regulatory developments will impact it. Recognized experts, regulators, and strategists, will return to High-Frequency Trading Leaders Forum 2012 to provide the information practitioners are looking for in an open and unbiased environment, highly conducive to the most efficient and effective networking.

With insightful keynote speeches and highly regarded panels, everybody involved in high-frequency trading will gain inside knowledge about the latest technologies that can drastically optimize HFT infrastructures and take a first look at upcoming regulations that could radically change the HFT firms’ business model. Topics that will be discussed at High Frequency Trading Leaders Forum 2012 include the movement toward emerging markets, every time more attuned to the use of bots, the regulatory environment, how new technologies are changing the game, including FPGA applications, and a look at the upcoming regulatory changes that will definitely impact how speed traders capture alpha.

High Frequency Trading Leaders Forum 2012 is produced by Golden Networking (http://www.goldennetworking.net), the premier networking community for business executives, entrepreneurs and investors. Panelists, speakers and sponsors are invited to contact Golden Networking by sending an email to info@goldennetworking.net.