Comment Re:where is the random? (Score 1) 395
It's actually a flawed analogy.
What you're simply pointing out is that there are inefficiencies in a particular market. Faster time to market eliminates these inefficiencies.
The guy with the slower connection simply can not use the old tried and true strategy of arbitrage.
Here's the breakdown.
If the price of gold is 1$ in San fran, but NY is buying it at 1.5$, that is an arbitrage, you can buy in San fran and sell in NY. It means the market of gold is currently inefficient. In the old days, you could be that truck driver that picks up 1.5 tons of gold at 1$ and sell it in NY at 1.5$. Later someone built a train line that made the trip faster and just obsoleted the truck driver. In the future someone invents a teleportation machine and obsoletes the train. Regardless of the situation, the market will see less arbitrage situations as the technology improves.
There are certainly wrongs with HFT, but eliminating arbitrage is not one of them.
Here's the breakdown.
If the price of gold is 1$ in San fran, but NY is buying it at 1.5$, that is an arbitrage, you can buy in San fran and sell in NY. It means the market of gold is currently inefficient. In the old days, you could be that truck driver that picks up 1.5 tons of gold at 1$ and sell it in NY at 1.5$. Later someone built a train line that made the trip faster and just obsoleted the truck driver. In the future someone invents a teleportation machine and obsoletes the train. Regardless of the situation, the market will see less arbitrage situations as the technology improves.
There are certainly wrongs with HFT, but eliminating arbitrage is not one of them.