What High Frequency Trading Looks Like To The Human Broker's Naked Eye

Stock Broker

Photo: Spencer Platt / Getty

The New York Times profiled a dying breed on Wall Street this weekend — the stockbroker at a small brokerage firm, trading without a computer running at high speed.The brokers profiled were Joe Saluzzi and Sal Arnuk, founders of Themis Trading. They’re advocating a slow down on Wall Street. Specifically, they want high frequency trading (HFT) firms to have to honour the price of a stock they’re offering for at least 50 milliseconds. They’ve even written a book about it called “Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street are Destroying Investor Confidence and Your Portfolio.”

The whole piece is worth a read, but the most interesting part to us was the quick description of what HFT looks like to the naked eye as brokers buy and sell.

From the NYT:

Mr. Arnuk then eyed the stock’s price on dozens of other trading platforms — private ones most people can’t see. Known as the dark pools, they help hedge funds and other big-money players trade in relative secrecy.

Everywhere, different prices kept flickering on the screens. Computers at high-speed trading firms, Mr. Arnuk said, were issuing buy and sell orders and then cancelling them almost as fast, testing the market. It can be hell on human brokers. On the tape, the stock’s price was unchanged, but beneath the tape, things were changing all the time.

“They will flicker to see who is not flickering,” Mr. Arnuk said of H.F.T. computers. “The guy who is not flickering is the idiot — the real investor.”

It’s not that Saluzzi and Arnuk want to blast Wall Street back to the days of Quotron machines and red suspenders, but they would like things to slow down to say, 2004.

Leave your thoughts on that in comments.

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