A Closer Look at High-Frequency Trading

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This is the VOA Special English Economics Report, from http://voaspecialenglish.com | http://facebook.com/voalearningenglish Once, stocks were traded through the open outcry system. Today fast, interconnected computers have mostly replaced the traders shouting prices on the floors of stock exchanges. Joe Saluzzi is a head of equity trading at Themis Trading in New Jersey. "The equity market has changed. It's no longer what you see on TV, it's no longer guys with colored jackets running around the floor anymore. .... The equity market is a bunch of co-located computers strung together by a bunch of wires, everyone trying to race to zero. The speed of light is the goal."Computers can process stock trades in thousandths of a second. Andrew Haines of Gain Capital is an online broker. "A millisecond can mean millions of dollars to the success of your strategy. Having a one, two, three millisecond advantage over other traders may mean that you get into a trade at a preferable price." Andrew Haines says an estimated seventy percent of all stock trades are high-frequency trades made with complex computer models. Stocks may be held for only seconds. But fast trades are also blamed for big moves in stock prices.On May sixth, two thousand ten, a leading measure of American stocks briefly fell about nine percent. The Dow Jones Industrial Average then recovered much of those losses by the end of trading that day. The Securities and Exchange Commission ordered steps to prevent future "f

Published 2011-11-02 · Watch on YouTube ↗
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