HFT trading question

Discussion in 'Trading' started by SideShowBob, May 26, 2010.

  1. When I submit a trade and get a price of 19.3901 does this mean an HFT trader front-ran my order and stole the 0.0001 from me? Not complaining they can have my 0.0001 just wondering why else I'd see a trade at that price.
  2. CET


    When you get xx.0001, which is almost certainly on a sell, your broker had another customer that was buying the same stock. So your broker can buy your shares and sell them to their other customer, and the broker gets to make the spread instead of the specialist or market maker. When this same scenario happens on a buy, you usually get xx.xx99. As I understand it this is allowed as long as the broker pays you a better price than the best bid (on a sell) or ask (on a buy) listed. So you get that hundredth of a penny benefit, but it can lead to a lot of partial fills.
  3. Actually it means the HFT'r front ran the bid amd payed .001 higher for your stock.

    Front running by definition is trading with prior knowledge of an order and it's conditions. Since there was no published bid for 19.001 when you attempted to sell, it means the buyer SAW your sell side, decided to step up and micro penny the buy side, and take a whopping .001 of risk using the 19.00 buyer to stop himself out.

    Trading with prior knowledge of incoming orders is EXACTLY what the SEC crucified the NYSE specialists for during the freeze function days.

    Now that the NASDAQ does that exact practice and not the NYSE, it's all good.

    Figure that out
  4. Your apparent understanding of how things actually work in the Real World has no place on this board...