by I.R. Mullin
Copyright©2014 I.R. Mullin. All Rights Reserved. No part of this book may be reproduced or retransmitted in any form or by any means without the written permission of the author.
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This is not the actual book, Flash Boys: A Wall Street Revolt by Michael Lewis. This work includes:
- A layman’s guide to high-frequency trading;
- critique of Michael Lewis’ book Flash Boys: Wall Street Revolt and a review of important facts that support Lewis’s ideas in his book;
- and a glossary of selected important terms used in discussion of high-frequency trading, explained in layman’s language.
This work investigates the nature of high frequency trading (HFT) and the issues created by high frequency trading.
High-frequency trading (HFT) refers to buying shares and other financial products in huge volumes and at extraordinarily high speeds with the help of superior connectivity and computing power, and then selling them at a higher price.
When it comes to high-frequency trading (HFT), there are no humans sitting and waiting for the orders to flash by on the computer screen. High-frequency traders, which are also known as HFTs, are not real human beings. HFTs are highly sophisticated computer algorithms, and they operate much faster than a human does.
In his book Flash Boys: A Wall Street Revolt, Michael Lewis writes that high-frequency trading firms, Wall Street big banks and U.S. stock exchanges are conspiring to rig the market against non-HFT investors.
He argues that the stock market is being manipulated in favor of insiders who have made many billions of dollars by exploiting computerized trading. This accusation is particularly threatening to the image of the stock market as an open and transparent system. It implies that finance is not a clean game, but rather a device for drawing revenue for the very rich one percent.