Chapter 11 is about the shady side of trading. Harris introduces order anticipators: people who profit not by knowing what a stock is worth, but by figuring out what other traders are about to do and trading before them. They are parasites. Harris uses that word deliberately. No better prices. No liquidity. They just extract money from other people’s trades.
In Part 1 we covered what brokers do, different broker types, and how they make money. Now we get to the uncomfortable part: what happens when your broker does not have your best interests in mind.
Chapter 11 is about the market’s parasites. Not informed traders who make prices more accurate. Not dealers who provide liquidity. These are the order anticipators: traders who profit by getting in front of other people’s trades. They do not improve anything. They just take.
Most brokers are honest. But the relationship between broker and client has a built-in conflict that can’t be fully eliminated. The second half of Chapter 7 in “Trading and Exchanges” covers this conflict, the ways dishonest brokers exploit it, and the systems markets have built to keep everyone (mostly) honest.