Good morning traders and a TGIF!
While many of us here on Steemit are not traders - some are bloggers, some are investors, some like to be called hodlers, i still believe a good amount of us have met HFT algorithms on markets. Whats HFT? HFT stands for high-frequency trading and basically means powerful computers executing massvie trades on market as fast as possible using algorithms, taking advantage of price moves, discrepancies and creating some of their own. HFT algorithms can often be seen in action when watching markets right before some heavy-hitting news events are coming out.
It's argued, that allowing HFT trading adds liquidity to the market, but it can easily be counter-argued that it's ghost liquidity, that comes and goes fast, as orders are placed and removed from the market in seconds.
Dow Jones Industrial Average crash in April, 2013 via cnn.com
There are claims that high-frequency trading now accounts for the majority of trading volume out there, just a few years back it was estimated to be responsible for approximately a dozen mini flash crashes a day.
Fast forward to today, we have cryptocurrencies as emerging markets. They have definitely had some of their own flash crashes already; how many of them were caused by HFT and if any at all, is unknown, since there are not such speeds available at the monent, but high-frequency trading is definitely making their way to Bitcoin and other markets as well.
It is yet unknown as well, how much the softwares, that cryptocurrency exchanges invest into, affect the action be ind the scenes. For example Cinnober's Irisium, the one that Bitfinex adopted, has extensive unusual behaviour monitoring, but the exact countermeasures are unknown. Mostly it's still a wild west out there and exchanges are happy to report the most volume is taking place on their exchange.
Enter Evermarkets
Evermarkets consists of former Wall Street guys, who are aware of the dangers of high-frequency trading and and it's effects on the markets and price. Whether they are driven by being burned in the past by HFT or more ethical reasons, let be anyone's own decision.
But Evermarkets are building a cryptocurrency futures trading platform, that is one day intended to rival CME and CBOE trading platforms. But how would one make it more transparent? Easy, build it on the blockchain.
The platform will execute trades on the auction model, where trades are bundled, and then subsequently sent and matched only after a specific amount of time has passed.
Accordign to Mark Pimentel, member of the team, this will make speed much less of an important factor, one that most global markets and big traders cannot currently do without. Having collected opinions from various retail and institutional traders and investors, people are looking for ways to trade without being the prey for shark at every moment of time (I can attest to that - trading has required an increasng amount of sharpened wits, attention and work, the more time is passing. Cryptos are a breath of fresh air - personal note).
According to the team of Evermarkets, international traders will be able to trade on the platform as early as 2018 already, while US is still not yet decided and talks with CFTC are still in it's infancy).
With a platform like this, newer and individual traders and investors stand a much better chance fighting their way through the shark infested waters of Wall Street. A welcome change.
Sources used:
businessinsider.com
cnn.com
evermarkets.com
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