Flash Trading

AAA

DEFINITION of 'Flash Trading'

A controversial computerized trading practice offered by some stock exchanges. Flash trading uses highly sophisticated high-speed computer technology to allow traders to view orders from other market participants fractions of a second before others in the marketplace. This gives flash traders the advantage of being able to gauge supply and demand and recognize movements in market sentiment before other traders.

Flash orders are also known as "step-up orders" or "pre-routing orders".

INVESTOPEDIA EXPLAINS 'Flash Trading'

Flash orders have been subject to scrutiny because of the advantage they give traders who are able to participate in the orders. Flash trading has been compared to front running, and opponents believe that the practice is harmful to market transparency. Proponents of flash trading state that it is necessary to provide liquidity for exchanges.

RELATED TERMS
  1. Manual Trading

    A trading system that involves human decision-making for entering ...
  2. Quote Stuffing

    A tactic of quickly entering and withdrawing large orders in ...
  3. Ultrafast Trading

    A lucrative and highly competitive method of stock trading that ...
  4. High-Frequency Trading - HFT

    A program trading platform that uses powerful computers to transact ...
  5. Front Running

    The unethical practice of a broker trading an equity based on ...
  6. Upstairs Trade

    A buy or sell transaction for an exchange-listed stock that is ...
Related Articles
  1. Investing Basics

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  2. Personal Finance

    4 Dishonest Broker Tactics And How To Avoid Them

    Protecting yourself from unscrupulous practices means knowing how to spot them.
  3. Options & Futures

    Direct Access Trading Systems

    DATs can dramatically speed up order execution - find out how this system gives novice traders an edge.
  4. Forex Education

    Price Shading In The Forex Markets

    This practice puts brokers ahead of their clients, but it doesn't have to be a negative for traders.
  5. Trading Systems & Software

    What is high-frequency trading?

    High frequency trading is an automated trading platform used by large investment banks, hedge funds and institutional investors which utilizes powerful computers to transact a large number of ...
  6. Trading Strategies

    How are Marubozo patterns interpreted by analysts and traders?

    Dig deeper into the Marubozo candlestick pattern, when the daily trading of a security never exits the range between opening and closing prices.
  7. Trading Strategies

    What are the most common momentum oscillators used in day trading?

    Take a look at some commonly used momentum oscillators that can also be used for intraday trading, such as stochastic oscillators or the Ultimate Oscillator.
  8. Forex Strategies

    How to Build A Forex Trading Model

    Forex trading markets work 24/7, providing ample opportunities to make profitable trades. How can you build a profitable forex trading model for yourself?
  9. Trading Strategies

    What is a common strategy traders implement when using the Exponential Moving Average - EMA?

    Learn a common strategy traders use in conjunction with the Exponential Moving Average indicator known as the moving average bounce.
  10. Trading Strategies

    Not All Online Trading Brokers Are Created Equal

    The online trading broker market is becoming more and more competitive. Small differences between them can add up to big fee savings for you--or losses.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center