NEW YORK (TheStreet) -- What big money likes most is predictable volatility.
Traders with capital can get in front of predictable market swings, take their profits, and get out fast.
That's what high-frequency trading was about. I first wrote about it in a 1999 profile of daytraders for Salon.
You see a stock moving and you get in, you get out before the move reverses. There may be just pennies of profit per share, but if you're disciplined, the thinking went, you could make some money.HFT simply automated this process. The "scandal" unveiled by Michael Lewis in his book Flash Boys was that BATS Trading found a way to beat the other markets doing this by microseconds, by locating their computers near the Holland Tunnel. (GS - Get Report) is out ahead of the move. The bank is closing its "dark money pool" called Sigma X, which was dedicated to HFT. It's even selling its New York Stock Exchange market-making unit. for $6.5 billion, and the sale price in 2014 is a reported $30 million. Over at Zero Hedge, Tyler Durden sees this as evidence Goldman Sachs is expecting a market crash.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts