These operators have different terms of business to retailer investors. They are treated as wholesalers and as such they do not pay commissions at anything like the rates you do.
These advantageous terms of business enable them to buy a small number of shares (say 200) for say $8.80 and seconds later sell the same 200 shares for $8.85 and in doing so make a profit of few dollars. If you tried that caper the transaction costs would give you a loss.
So lets say that hypothetical trade the algo made a net profit of $5.00, and they were able to do similar trades 100x per day in CCP alone, then that would generate a profit from this super predator of $500. If they can run similar bots across 100 stocks then they can generate a daily profit of $50,000 from 10,000 trades (20,000 transactions). They can get incredibly rich doing this, and they are almost guaranteed to do so. If an algo starts generating losses it will either modified or turned off.
Ultimately the alog owners end up fighting each other in the market place for tiny margins. Their main moral justification for creating this tilted playing field, is that they provide the market with liquidity.
K
CCP Price at posting:
$8.93 Sentiment: Buy Disclosure: Held
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