How to make $ 90,000 per hour for years. The structure of the modern stock's world /by B. Varchev/

The so-called "Flash Boys" are definitely the most profitable players on Wall Street and City of London at the moment. They move along the edge of legal and illegal business, as two companies so far managed to maneuver skillfully to maintain the status quo of the big players in this game of speed called - High Frequency Trading. The diagram below wonderfully illustrates how we can trace the path of their orders: client - broker - Exchange - broker - client. The big conflict generating so much controversy whether this trade is fair or not, in simple terms is as follows:

- Ok, who will be faster in the execution of client orders, is logical and moral.

- "The other side of the moon" is still dark, namely: how HFT players receive quotes and whether they use special algorithms by which they cancel orders already send to the Exchange, if their price isn’t reasonable. This issue has been debated, argued, fingers have been pointed... with no result as of yet. "Evil tongues" say that these algorithms work continuously and without going into unnecessary depth I’ll call it – these algorithms work for the broker, not the client as required by law, thus providing an advantage in price, incomparably better than the entire global competition. The second dilemma is the power of quotation - "some" claim that only their data feed is directly from the exchanges and all the rest / even paying half a million per month banks and hedge funds for extra speed / lag to about 20 milliseconds, enough time for the Flash boys to .... make $ 90,000 per hour. Myth or fact, at least for now only some chosen by God know.

Biser Varchev