this post was submitted on 31 Aug 2024
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Explain Like I'm Five

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ELI5: Why is high frequency trading allowed? (lemmy.ca)
submitted 2 months ago by Eiri@lemmy.ca to c/explainlikeimfive@lemmy.world
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I don't see how it's a benefit to capitalism or companies or, well, anyone, really, to allow people to make thousands of trades a day for minute profits on each.

My gut feeling is that the stock market would not suffer, and less resources would be wasted, if trades and updates to stock prices were limited to, say, one batch per hour.

There are probably reasons the system is the way it is though.

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[–] Gradually_Adjusting@lemmy.world 1 points 2 months ago

Instead we have to worry about algorithmic traders flash crashing stocks. The tail is always going to try to wag this dog, but at least when humans are doing it other humans can react in real time.