Comment Re:Not just useless, but actually toxic. (Score 5, Informative) 452
while in theory your idea is correct, the harsh reality is that in practice, the large investment firms increase their profits drastically because there are actually two markets. this isn't strictly legal, but it's there. the large firms have dedicated connections to the exchanges with guaranteed SLAs and lower latencies than any other regular participant in the market. this allows them to stuff the buy/sell queues and rapidly cancel orders before they go through. the purpose of this is to deduce other bidders' price points and gain an edge. there are a number of such hedge funds (and even a major bank whose name escapes me), for example, that have had perfect trading days for over a year. statistically impossible outcomes like this only come from gaming the system in the above mentioned manner. as usual, the regulators are asleep at the wheel and the markets become more volatile week to week with increasing flash-crashes exactly because of these schemes. more efficient markets these are not.