Markets and technology built HFT (high frequency trading) into a stock market force when inside allies, dollars and power changed markets. Potent changes favored HFT over investors. ​Until then, most changes during the evolution of markets, ​had supported investors. But after HFT arrived, technology, dollars and power changed market priorities. The new priorities and technology, tilted markets against investors. To trace the technology evolution, see the infograph included in this lesson. It shows 4 centuries of technology evolution that made HFT possible.
​Question answered in this lesson:
​​When did high frequency trading begin and how did it get established?
HFT evolved once electronics and computers infiltrated stock markets. It began in major markets when NASDAQ first introduced electronic trading in 1983. After that, in 2000, the SEC accepted computer trading opening the doors to HFT. As the technology evolution continued, execution times fell from several seconds in a rapid decline to billionths of a second. That cutting edge technology progressed to make HFT an established factor across markets.
Such an outcome was inevitable once stock markets met the evolving technology. And it was the technology evolution that changed markets. Until then, most stock market developments benefited investors. But HFT, money and power flashed past investors when markets were radically changed! Those changes are illustrated on the included infographic. That infographic traces the 4 centuries of increaseing speed and evolving technology​.
Stock markets and technology built HFT, is lesson 3, from White Top Investor course 510, High Frequency Trading Explained. ​To learn more on related topics, click the links at the end of this lesson.
What you learn from this lesson:
Markets and technology built HFT​
Stock markets and technology ​built high frequency trading with the combination of evolving technology, money and power that favored HFT. That favorable treatment led markets to place investors at a disadvantage. As a result, favored HFT players became deeply embedding across 21st century stock markets. Now that favored position affects the wealth of every investor including those who have never heard of HFT. This lesson explains the technology evolution and the role that played helping establish and embed HFT in stock markets.
Centuries of evolving technology
Over 4 centuries, stock market technology evolved to deliver HFT. The unending drive for profits that powers stock markets combined with evolving technology ​to build HFT. That technology powered combination now spreads a layer of investor fleecing costs across markets. Investors, funds and markets bare the cost with proceeds going to HFT. The technology evolution that powers the scheme is illustrated on the infograph. ​It traces the evolution of the 3 key technologies essential for building HFT.
Those technologies are:
​Communication
​Calculation
Coding
The infograph uses images to represent the evolution of these technologies. The endless search for an advantage drove investors to those technologies. They chased profits by doing all they could to be first to get news or market data.
Better informed investors always move to the front of the profit line. Informed investors can buy or sell before others react or know and move prices. Seeking that information advantage continually drives markets to ever faster technologies.
Communication technology evolved
The communication evolution shows European sailing ships racing overland traders to the Orient. Than carrier pigeons are the messengers bringing news of Napoleon’s defeat. Electricity, telegraph service and telephones follow as now messages approach light speed delivery!
Calculation technology evolution
Calculation evolution shows from tote board and abacus to computer and nanosecond processor. The progression of processing technology flows to join the other technologies.
Coding technology evolution
Coding evolution has from counting and formulas to deep learning and artificial intelligence. These developments also flow with the other technology streams.
Greed and speed feed the wealth race
The following timeline illustrates market events as a never ending race for wealth. Speed is money. Greed and speed, rather than fairness and stability, always drives markets. Events in the four centuries of markets show the history of seeking speed that brings us to the era of HFT.
​Markets and technology ​built high frequency trading traced through 4 centuries - See Infographic
Three technologies evolved in tandem to build the power of HFT.
Technology progressed until ​markets and technology ​built high frequency trading
From the beginning, innovative humans and technology progress, continued changing markets and investing. Development milestones over 400 years are listed below:
First 300 Years - ​1602 - 1899
​20 Century - 1900 - 1999
​21 Century
Now You Know:
Markets and technology built HFT
​You know, stock markets and technology ​built high frequency trading with the combination of evolving technology, money and power that favored HFT. Because HFT got favorable treatment in markets, investors have been placed at a disadvantage. one result of favoring HFT, this stock market change has been deeply embedded across 21st century stock markets.
Now well established in markets those changes affect the wealth of every investor including those who have never heard of HFT. The explanation of how the technology evolution ​got HFT established and embeded in stock markets. The lesson is from the Ultimate Guide To Stock Market Investing Success by White Top Investor.
​You also know the answer to the question:
When did HFT begin and how did it get extablished?
Paragraph 2 the answer reworded here omitting the course and lesson names and numbers.HFT evolved once electronics and computers infiltrated stock markets. It began in major markets when NASDAQ first introduced electronic trading in 1983. After that, in 2000, the SEC accepted computer trading opening the doors to HFT. As the technology evolution continued, execution times fell from several seconds in a rapid decline to billionths of a second. That cutting edge technology progressed to make HFT an established factor across markets.
Such an outcome was inevitable once stock markets met the evolving technology. And it was the technology evolution that changed markets. Until then, most stock market developments benefited investors. But HFT, money and power flashed past investors when markets were radically changed! Those changes are illustrated on the included infographic. That infographic traces the 4 centuries of increaseing speed and evolving technology​.
​In addition you know these lesson takeaways from, ​Markets and technology built HFT:
Markets and technology built HFT into a stock market force when inside allies, dollars and power changed markets. Potent changes favored HFT over investors. ​Until then, most changes during the evolution of markets, ​had supported investors. But after HFT arrived, technology, dollars and power changed market priorities. The new priorities and technology, tilted markets against investors. To trace the technology evolution, see the infograph included in this lesson. It shows 4 centuries of technology evolution that made HFT possible.
- ​​HFT become established because 3 related technologies evolved
Communications - Calculation - Coding all underwent significant developments - HFT technology combines the latest communication, calculation and coding
- First with information has the profit making advantage
- Communication technology evolved from carrier pigeons to near light speed
- ​Calculating evolved from fingers and tote boards to nanosecond processors.
- Coding grew from finger counting to Artificial Intelligence
- HFT grows, seeps and embeds into virtually all markets.
- Technology evolves to become a faceless, nameless HFT fleecing machine.
- HFT can clip investors, funds and markets.
- HFT clips money from trades across markets.
- HFT money flow spews into the pockets of the HFT wizards.
- HFT benefit wizards and insides not investors or funds.
- Understanding HFT power prepares us to deal with it.
- To keep more money in your pocket learn to deal with HFT.
- Lessons in this course teaches the knowledge and skills needed to deal with HFT.
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High frequency trading explained, lesson links:
Introducing high frequency trading explained Lesson 1
Racing for profits drives high frequency trading Lesson 2
Markets and technology built HFT Lesson 3
Technology powers high frequency trading Lesson 4
High frequency trading secrets exposed! Lesson 5
Laws and ethics beat investors Lesson 6
Market management burns investors Lesson 7
High frequency trader 3-Way ambush Lesson 8
Fair and foul high frequency trading Lesson 9
High frequency trading strategies, risks and regulations Lesson 10
Misinformation myths of high frequency trading Lesson 11
Markets technology and laws respond to high frequency trading Lesson 12
Investors deal with high frequency trading Lesson 13
Next lesson 4: ​Technology powers high frequency trading
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