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Dark Pools and High Frequency Trading For Dummies by Jay Vaananen

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Chapter 12

Jockeying Too Much for Position

In This Chapter

arrow Understanding front running

arrow Cancelling orders

arrow Minimising slipping

arrow Fighting back against the algorithms

The equity markets consist of a giant stream of information and price data that is constantly moving and changing. News flow affects the price of stocks and so do the different bids and offers being posted on the market. Executed trades have an effect on prices, and also the orders are constantly being cancelled and revised, which moves prices one way or the other.

This perpetual stream of data all adds up to a crowded market with all the different market participants jockeying for position, trying to get the best price possible by being at the front of the order queue at just the right time. It’s not just about getting a trade execution, though; the jockeying for position in the order book can also be an attempt at gathering information about how other investors and traders are valuing a stock.

This chapter shows you the different types of actions that traders and investors are involved with when trying to get the best ...

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