An Engineer in Fairyland – Millisecond trading?

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While I am pondering The Market and things, is millisecond trading really such a good thing?

Even I, who struggled with control theory at university, know that too much gain in system can lead to instability.

And that doing trades faster and faster, unless you proportionally reduce the size of the trades, is increasing the gain of the system.

I have always hoped that clever people have set the ground rules so that fast computer trading is inherently stable.

But I fear that is not so, particularly as humans seem to have to intervene and stop trading in some stocks sometimes when its value rushes one way or the other.

So, wise someone, please tell me how stable operation is ensured as I have heard that een faster trading is planned and I want to sleep at night.

‘Alice’

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