Speed and Market Efficiency

摘要

An efficient market reflects the current price for a given amount of supply and demand. The four key aspects of the equation are price, order size, supply and demand, and time. In an efficient market, supply and demand should produce a price given the size traded, and the price should constantly reflect changes in the supply and demand for an asset at any point in time. Too many buyers and the price will go up; too many sellers and the price will go down.rnWhen engaged, the trader (or a trading bot) must be constantly aware of supply and demand imbalances. If gauged incorrectly, the trader (or the machine) will either miss an opportunity or, conversely, leave a stale quote in the market long enough for someone else to take advantage of it. That is what trading is all about. That is why professional traders are professionals, and that is what differentiates the good trading algorithms from the not-so-good algos.