MICHAEL DURBIN, All About High-Frequency Trading (New York, NY: McGraw-Hill Companies, Inc., 2010, ISBN: 978-0-07-174344-0, 196 pages, $22.00).

Following the collapse of the financial markets, word spread among traders that firms with high-frequency trading (HFT) systems had earned an estimated $20 billion during the market correction (Salmon 2009). This shocking revelation left many to question whether these largely unregulated computer traders contributed to the massive stock market decline. As Michael Durbin points out in the preface to All About High-Frequency Trading, there was powerful circumstantial evidence that HFT systems had become very influential players in the financial markets. For example, from 2005 to 2009, average daily trading volumes of NYSE-listed stocks tripled, the average number of daily trades increased eightfold, and the average trade execution dropped from more than ten seconds to less than one second. Humans were not capable of executing trades that fast.

All About...

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