In todays episode we discuss Michael Lewis's Book Flash Boys and the effects of high frequency trading on the average investor. We especially focus on what the average gold and silver investor. Without the backing of a huge hedge fund it is imperative for average investors to avoid competing with high frequency traders. We often should act in the opposite manner they do. Gold and silver investors and even stock market investors need to play the long game and look for long term investment returns. Commissions and premiums on coins make frequent trading a poor decision for most investors. High frequency traders make there money getting in and out of markets as fast as possible and see arbitrage opportunities between different stock markets. High frequency traders then use this momentary information advantage and race their trade decisions ahead to other markets in order to exploit this arbitrage opportunity. While it is fun to learn about how these high frequency traders make money we see they can have negative effects in the stock market. The flash crash in 2010 and recent single stock crashes to near $0 then returning to regular prices likely both were caused by high frequency traders according to Michael Lewis. I highly recommend checking out Michael Lewises book Flash Boys if you are interested in learning more about wall street and specifically high frequency trading. Lewis does a great job making the topic approachable and easy to read.
Flash Boys
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