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The Ethics of High Frequency Stock Trading

Page history last edited by Julius Tan 8 years ago

Digital Ethics Book Project Reflection Format

 

The Ethics of High Frequency Stock Trading 

Marc Davis

Tuesday, August 12th, 2014

http://digitalethics.org/essays/ethics-high-frequency-stock-trading/

 

The Ethics of High Frequency Stock Trading 

 

First impression: This article is about the use of computers in stock trading 

 

Quote: 

“In the world of business or finance every enterprise seeks a competitive edge to use against its rivals in the quest for profits.”

 

Reflection: 

This article intrigued me because I’ve always wanted to learn more about the stock market. It made me want to buys stocks because of the money you can make. So far all I know is that you must know the timing on when to buy and sell the stocks. And that a person could buy and sells stocks.

This article is about high frequency stock trading. This kind of stock trading is done by a computer with an encoded algorithm in it. Before we move further, an algorithm is a set of commands programmed into a computer that makes it perform certain actions. It is basically the purpose of the set of instructions it follows. Now let’s go back to the topic at hand and that is HFS (High Frequency Trading). Like I said high frequency trading is done by a computer, but this computer is not cheap that’s why not all firms have the pleasure of using this computer. What so special about this computer is that it can do trades every millisecond. In the stock market, having a profit worth a penny is already a win. So most companies use this machine to increase their trading speed. From what I know, the stock market can change in seconds. That’s why every second counts. The problem with this is people are questioning if using this machine is fair.

 

This makes me realize that everybody does not make an honest living.

 

5 things that I’ve learned: 

Stock market is a fickle business.

The stock market is scary  

I can earn a lot with my course.

Technology is being used everywhere.

Not everyone supports the use of technology.

 

5 integrative questions:

What is front running? 

What will be the next move of the US government?

How will the removal of HFT affect the stock market?

How can we promote honest living with stock market trading?

How can we ensure the honesty of stock market trading? 

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