Superman III might be a terrible movie, but it’s a great vehicle for explaining high-speed trading. The clever Bloomberg video above uses the plot of Superman III to explain the complicated nature of high-frequency trading.
In the video, Bloomberg’s Sam Grobart compares the actions of Richard Pryor’s character in Superman III to today’s HFT traders. In Superman III, Pryor’s character gets rich off the small, fractional cents he steals from paychecks. In the world of high-frequency trading, traders make their money by buying and quickly re-selling stocks, earning similarly small profits. When enough of these micro-transactions are completed, the overall haul can be quite impressive.
The same “fractional currency” plot from Superman III was also featured in the cult comedy hit Office Space.
High-speed trading has been making headlines lately thanks for Michael Lewis’ latest book “Flash Boys,” which explores the idea that this type of trading “rigs” the stock market. You can buy this book here.
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High-speed trading, aka high-frequency trading, is a complicated concept. This video breaks it down in under 60 seconds.Click here to read more