Is A Lack Of Security When It Comes To HFT The Cause Of Market Woes?

Most people these days are not big fans of Wall Street. They see the bankers and traders on Wall Street as being greedy people and are the ones who are the cause of the shape of the economy right now. But even though there are a lot of people that are still mad at them, the Wall Street guys continue on the path of trying to make money. That is what they are paid to do and they are trying to be the best that they can be.

Is A Lack Of Security When It Comes To HFT The Cause Of Market Woes?

One of the ways that you see market guys making money is through the use of HFT. The letters HFT stand for High Frequency Trading. This means that these guys are running highly complex algorithms on very powerful computers to try and find patterns in the market. But instead of trading at a slow pace like everyone else does, these guys make thousands of trades per hour. Each trade may only bring a few cents in profit but once you start to add them up then you can see that there are millions that can be made.

But there have been a few glitches when it comes to HFT. There have been a few “Flash” crashes that have happened recently. A flash crash is when all of the HFT algorithms are basically matched up, which then causes them to crash either a single stock or an entire sector of the market. It starts a domino effect in which even the people who are not using HFT start to sell as well. Some people tend to think that these Flash crashes are caused by simple software malfunctions while others tend to think that it is more serious. Some people think that there are hackers who have been able to get into the system and cause these flash crashes. While there is no proof to it yet that does not stop the speculation.

If a hacker was able to get into a system like this they could cause all sorts of problems. If it does happen then there is going to be a lot of changes in how the market is ran.

About Lee Munson

Lee's non-technical background allows him to write about internet security in a clear way that is understandable to both IT professionals and people just like you who need simple answers to your security questions.

Speak Your Mind

*