The twist here is that in the movies it was all a con, but here in Real Life it is actually working, that is certain people are getting information faster than others for what appears to be risk-free profit.
The last part(risk-free) is what I have a problem with, if you are providing liquidity, then you should be making profit while taking certain risk. The flash order trading seems like a licence to print profits without the risk.
Well, there's multiple flash traders. If you're trying to buy at $21 and sell at $21.01 you have two trades you need to make and you run the same risk as a regular old non-flashing market maker: that you get one leg of the opportunity and your competitor gets the other, then both of you are stuck with a position that you trade out of at a loss.
True, each flash trader is competing for profit, but it seems that the typical mutual fund holder, who invests on time scales longer than 24 hours, is uniformly screwed.
Considering that the typical mutual fund holder represents the vast majority of the public, and that flash trading is only profitable for a handful of people, I would guess it is time for a change.
The twist here is that in the movies it was all a con, but here in Real Life it is actually working, that is certain people are getting information faster than others for what appears to be risk-free profit.
The last part(risk-free) is what I have a problem with, if you are providing liquidity, then you should be making profit while taking certain risk. The flash order trading seems like a licence to print profits without the risk.