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ELI5: Why is high frequency trading allowed?
(lemmy.ca)
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this post was submitted on 31 Aug 2024
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Explain Like I'm Five
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Maybe we could charge a minor fee per transaction, too small to matter for most stock traders. High frequency traders though would have to pay quite a lot simply by making lots of transactions.
They pondered some ridiculously low fee, like 0.0000002% (no kidding) and it was too much here in the EU.
If you're HFT/scalping you'll almost always be trading DMA in which case you'll almost always have per-share commission, usually less than .005
The investment bank already does that and calls it commission. It's basically how the Wolf of Wall Street's main character got started: commission on penny stocks.