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Dark Pools and High Frequency Trading For Dummies by Jay Vaananen

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Chapter 15

Ten Ways to Swim Safely in Dark Pools

In This Chapter

arrow Looking out for high frequency strategies

arrow Following the trading book

arrow Gaining market intelligence

The more insight you have into how dark pools and high frequency trading (HFT) affect the securities that you’re trading and what your broker is doing with dark pools, the higher your chances for getting a better price for your trade. This chapter gives you ten easy tips to help you to protect yourself when planning on placing a trade.

Watching the Bid Offer Spread Action

When you decide to make a trade in a specific stock, keep an eye on the spread – not just for a few minutes before you place your order, but well in advance. Pay close attention to the bid offer spread for days and even weeks in advance. Know what the average spread is and whether any situations occur when it’s wider or narrower than the average.

remember.eps The bid offer spread is where the trading is done. The bid is the price that someone is willing to pay you to buy your stock, and the offer is the price at which someone is willing to sell you his stock. Check ...

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