For those, who got acquainted with the innovations happening around the financial market, those two terms should not be a newcomer. However, it is difficult to keep up with all those new methods that we are offered, and first, let’s try to make them clear to find the valid correlation between them. 

What is Gamestop and what happened to it?

Gamestop is an American shop that sells games, consoles, and many other electronic devices. As well as many other companies, Gamestop (GME) was also undergoing big financial troubles due to the global financial crisis which itself is caused by the coronavirus pandemic. 

Here to mention the platform Reddit (which spent its whole commercial funds for the 5-second commercial during the Superbowl), which is more like Twitter or Facebook, where a lot of events are discussed. One of them is trading on the financial market and values of stock and shares and where they are going to start investing. 

Those who are actively involved in stocks and shares, often predict which company is more likely to go down in price or increase. You got it right. GameStop was one of the companies, which hedge funds had bet it would lose its value. However, not everything went as it was predicted to go.

A lot of people, from the Reddit platform, decided to buy shares of Gamestop and as a result, the demand was raised and the price went up massively. 

Image Source: Unsplash

What does HFT mean?

The acronym HFT stands for - High-frequency Trading which is an automated platform, used by large investors, hedge funds to transact plenty of the orders at the highest speed. We can boldly say that it is profitable and expensive, simultaneously, not to mention its hassles and limited space. HFT trading is often mistakenly confused with trading robots, although these are completely different things. Trading robots are computer programs where the maximum and minimum expected prices are indicated and executes the trade itself, while the trade in the case of FHT strategy, is made by the traders themselves. 

How did HFT traders react to this? 

Well, to start with, the process was started by the HFT traders from the beginning, and the Reddit platform strategy was against wallstreetbets. They wanted to make a different case as an exception, and it appeared to be a success. 

HFT traders were the ones who made a bet on GameStop shares that would go down and Reddit users, vice versa, bought the shares for the demand and price to increase. After that HFT traders instantly started to buy the shares and after the situation was a little bit in control, finally, they sold them again. 

So, if anyone has a question, whether the HFT traders gained profits or lost their money, the answer would be the first option. 

How did society react? 

The words, such as GameStop, Reddit, stocks, or many others were trending overnight, on every international platform. Everyone was googling what was the meaning of any of them and society needed the information. 

As we saw from the Elon Musk tweet, he was fond of the action which was happening around GameStop, and his tweet, even made the price soar. 

American economist and political commentator Robert Reich was also a protector of economic manipulation and asked people, why was this different from the 2008 Wall Street gambling session which caused great economic troubles. 

Unlike those two outstanding people, Michael Hiltzik, Los Angeles Times columnist assumed the fact as an “unacceptable market manipulation”.

Conclusion

Everyone should agree that this fact was an example of rapid developments in the financial market. The market is very diverse itself and anyone, who wants to become involved in that, should have proper knowledge and information. 

The case shows that the financial market is a very complex field and everything can be changed in less than a minute and even experienced HFT traders can lose a huge amount of money. The main thing is to know how to react, as soon as possible.