I often hear in the news that High-Frequency Traders can front-run incoming trades because they are faster at acquiring information and to execute trades. I also read that speed is only a necessary condition but not sufficient. The other necessary condition concerns the "special order types" that HFTraders have access at different exchanges... what are those special order types? It is not market or limit orders... what's so "special" about them?
closed as off topic by chrisaycock Apr 6 '13 at 21:49
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Everyone can do what HFTs do, if they spend the necessary time and money to build and run the infrastructure required. This may involve becoming a regulated broker/dealer, but it is in no way an invite-only club.
Now, to your specific question, you'll find some information on Haim Bodek's site. Bodek does content that ISO's and Day ISOs are used to gain certain microstructure advantage. Of course, anyone trading in the market is attempting to gain an advantage of some sort. Another example is the Hide not Slide order. This can be used to gain microstructure advantage resulting in advantageous queue position when a new level lights. Again, the order type is available to any market participant whose market access makes it available to them (meaning, your broker could give you access to hide not slide, if they wanted to).
Front running is not possible and is against the law. Anyone that contends that HFTs front run orders is misinformed. What they might mean is that HFTs react faster than they can. This has happened before and can be seen as both an advantage (in the early days) of being a local in an exchange pit as well as a disadvantage (1990s, early 2000s) of being a pit trader in an increasingly electronic market. The HFTs are simply the next step.