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by kasey_junk
4457 days ago
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In your example, you did not get ripped off by a HFT, you priced your order incorrectly and lost money. That is the nature of investing and has nothing to do with HFT. Further, what Chris mentions in the article is not a simple limit order, it is a specific order type (ALO) that will not pay the bid ask spread regardless of how slowly it arrives on the market. If you don't want to pay up for liquidity, this order type will do exactly that. As for the call auction, it provides a similar functionality but worse price discovery. The prices are more acurrate through the day because it is continuous. You as an investor can decide if paying a more incorrect price is better or worse than paying for liquidity, but in neither case is it an HFT ripping you off. That said, HFT systems do participate in the open auctions... |
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I suggested Call Auction because it's a good way to avoid paying the spread, and also avoid execution risk, both at the same time. Yes, the final execution price may be made of limit orders that did not take new information into account, but the ALO order you place into the market will get stale too unless you continuous adjust it, and even if you do, the slow reaction of you and your web browser will be no match for NLP bots scanning the news.
I made a bad booboo with the "You're worried the $101 isn't actually there - i.e. if you place an order to buy for $102, either the $101 order will get pulled by the HFT trader, or the HFT trader will buy the $101 order and sell it to you at $102.", looks like I got confused by the CNBC video I watched the other day. But see the other comment why you might make a limit order will a better price than the best offer.