Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

Ok, but what do high frequency trading bots possibly do to help me eat apples in winter (a deeply unecological mode of consumption, btw)?


I believe that they provide liquidity. That’s a fancy way of saying that they ensure that any time someone wants to sell he can find a buyer, and every time someone wants to buy he can find a seller. That in turn means that folks are more confident of their ability to enter and exit a position, which means that they are more likely to enter and exit positions, which makes the market more efficient at finding prices.

And of course prices are hugely valuable: the market is a conversation about the relative value of everything, and the language it speaks is prices. So by enabling liquidity, high-frequency traders are enabling efficient allocation of resources towards those things which mankind most dearly needs and desires.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: