No. In fact, it’s a core skill. In the past, many large-cap stocks have fallen quickly. We are not advocating that the large-caps be punished with a big trading penalty, but it might change their focus from simply driving the market, to being an important part of the market’s strategy. They also can’t be left sitting on stocks where they do no trading. If all the big-caps were doing was getting out of the market before other big-caps did, they might not do anything in the future. They can still get an enormous amount of money for their effort by creating large “crowd” markets where anyone can buy stocks.
Does scalping trading violate securities laws?
There are no laws against trading with high-speed trading bots, and these could well provide many of the high-speed trades that stock traders seek out. They also could become even more prevalent if the Securities Regulation Commission and CFTC are unable to find ways to stop them. The SEC has been looking at a proposed rule change that would stop “sham” trades where the bot operator or other high-speed trader appears to be making legitimate trades in the stock that the investor sells off; it is also investigating this sort of activity.
In addition, one of those problems that could soon be addressed is the problem of “insider trading.” For those wondering whether someone is buying a stock at the public’s behest, high-speed trading could provide many ways for the trader to influence stock prices. If these bots are making large sums of money, they are going to continue to do it. The idea is that if one big high-speed trader makes a lot of high-speed profits off of stock buy-ins, the investors who are buying and selling through them are likely doing so for the wrong reasons. This type of insider trading can be more difficult to prevent than large size and volume trading. Some of the biggest trades have been made with large bots or automated stock-trading programs. However, there is no evidence that these are necessarily illegal activities.
What’s next for high-speed trading?
High-speed trading is not just for big traders, and it has been around for a long time. It’s important for people to understand that it’s not just for big traders — and if you are taking large risks you may have to think twice about it. We believe there is room to explore new technologies for high-speed trading.
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