After Knight Capital, Here’s What You Need To Worry About From High-Frequency Trading

High-Frequency Trading Leaders Forum 2012, How Knight Capital's 'Knightmare on Wall Street' Could Transform the Regulatory Landscape and Impact Investors, Speed Traders and Brokers

High-Frequency Trading Leaders Forum 2012,

Ever since the meltdown at Knight Capital earlier this month, the debate over high-frequency trading has exploded.

Reported by Matt Koppenheffer, The Motley Fool, in short form, high-frequency trading is a flavor of trading that leverages computers and the speed of super-fast data connections to make lightning-quick trades, and lots of them. This means that, often, the trader‘s servers are situated in the same data center as the exchange’s servers. While there’s no single strategy of a high-frequency trader — they might be acting like a market maker, or playing index arbitrageur — the common thread is that they all rely on speed to succeed.

So, the $1 trillion question (inflation is brutal) is: Is this type of trading a major risk for markets, or closer to a non-factor?

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