Is High Frequency Trading Ethical?
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High-frequency trading is the process of executing system-generated orders in the blink of an eye. High-frequency trading has a competitive edge over the other traders who do have access to expensive, super-fast computers.
That said, high-frequency trading is ethical, and it does not break any law because the trades are on pre-programmed strategies with every possibility of making losses. On the contrary, insider trading has an illegal competitive advantage since the trader has prior information on the likely outcome of a particular asset class.
Reprinted from Asktraders, the copyright all reserved by the original author.
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