Found 4 comments on HN
guiambros · 2018-09-11 · Original thread
It means they are handing over your transaction to HFTs, who can then see your transactions ahead of everyone, and buy the stock right before and then sell to you for a higher price. Imagine you just issued a BUY order at market price; they can buy at $99.9 and sell to you for $100, making a $0.01/stock profit. Rinse and repeat millions of times per day.

This is very similar to "front running" [1], but because a) this happens privately and in small quantities, and b) it is not necessarily privileged information, it's considered legal by the SEC. But it is highly questionable for sure.

"Flash Boys", by Michael Lewis [2] is a great read, and goes into detail on the world of high frequency traders, and how they operate.

[1] https://en.wikipedia.org/wiki/Front_running

[2] https://www.amazon.com/Flash-Boys-Wall-Street-Revolt/dp/0393...

davorb · 2016-06-24 · Original thread
> Maybe you can tell us something about their coding practices. A friend of mine who work at GS told me they have an absolutely massive ball of spaghetti that takes 7 hours to compile. That's for their trading systems.

In case no one with actual experience responds to you, you might want to check out Flash Boys[0], which spends a little time talking about GS's code. From what I've read in that book and in other places, what you heard seems to be the correct.

[0] https://www.amazon.com/Flash-Boys-Wall-Street-Revolt/dp/0393...

mhomde · 2015-01-14 · Original thread
The only reason why this is "illegal" and HFT is legal is that the HFT firms are paying customers of the exchange. It's really quite scary how complicit and front-runned the whole stocktrading business has become. I really recommend Flash Boys which is an interesting read on the topic

http://www.amazon.com/Flash-Boys-Wall-Street-Revolt-ebook/dp...

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