Avoid Competing with HFTs

[MarketOwl]

If the HFTs are profitable, as we all know they are, they are extracting those profits from other traders. When the HFTs didn't exist, those profits they extracted were left on the table for institutional and retail traders as well as human market makers. Although HFTs act as pseudo market makers, they are much more efficient and profitable than human market makers.

And it is only logical that since HFTs are very short term traders, they are taking most of their profits from those that trade frequently, often daytraders.

 

[botpro]

The solution to the HFT problem is to introduce a 1 second wait time before one can modify an order in the book.
Another solution would be to charge fees for modification and cancel orders.
Of course these checks must all be done centrally by the computers of the exchange, and for everybody equally without any exception.

Will I now get a Nobel prize for this incredibly hard to find solution, for the regulators, as they still debate for years; it took me just 1 minute to come to this solution.

 

[lawrence-lugar]

People, atleast retail traders, put too much emphasis and blame on HFT firms.
I think it's kind of silly -- it's like blaming and getting all mad at local sales tax...Does it really matter if it's 8.25% one year, then 8.45% (or lower) another year...
It's kind of meaningless in the greater picture of things.
Those HFT firms are making a very tiny of a %. -- it's not like they are killing it and raping us.

 

[botpro]

IMO HFT should be regulated as it is a parasitic way of making profits to the disadvantage of all normal market participants.

 

[Laissez Faire]

Yes, HFT may have replaced human market makers and it would be silly to compete directly against them in THEIR market segment, but how does HFT prevent YOU from buying the day low and selling at the high?

The liquidity is there...it's up to you, really.

 

[AlphaRocks]

When the HFTs didn't exist, those profits they extracted were left on the table

They were not left on the table, they went to the investor/trader, since they only dealt w/the specialist they got matched at the exchange. Now, there's a chain of intermediaries, from brokers sending trades to gain payment for order flow (like TDA-Citadel relationship), to HFTs jumping ahead of you and pushing prices up/down whatever the case may be and increasing slippage.

And it is only logical that since HFTs are very short term traders, they are taking most of their profits from those that trade frequently, often daytraders.

Agreed

 

[der_kommissar]

And it is only logical that since HFTs are very short term traders, they are taking most of their profits from those that trade frequently, often daytraders.

Good arguments in this thread...

Take this one step further...The dominance of HFT, and more importantly, the recognition by most non-HFT participants that they can't compete with the machines has left a gaping liquidity hole in this market...I wouldn't even want to speculate at how difficult it must be for large funds to unload positions in this razor thin market...all of this "fake liquidity" that gets partial'd all the way down.

 

[botpro]

I've read in a recent article that an order gets confirmed in just 35 microseconds, ie. in 0.000035 seconds.
And in just 1 millisecond (that's 1/1000 of a second) the following is possible:
a highspeed trader (HFT) can in that time do 500 times issue a modification order (ie. change the order) and 150 times execute a trade.
Source (in German): http://dist.algotrader.ch/wp-content/uploads/2016/02/BILANZ_HighFrequencyTrading_2016_02.pdf

 

[vicirek]

Good arguments in this thread...

Take this one step further...The dominance of HFT, and more importantly, the recognition by most non-HFT participants that they can't compete with the machines has left a gaping liquidity hole in this market...I wouldn't even want to speculate at how difficult it must be for large funds to unload positions in this razor thin market...all of this "fake liquidity" that gets partial'd all the way down.

Without this fake liquidity current assets prices are unsustainable. Asset price inflation is the real issue not HFT. HFT has been allowed in the marketplace for a reason. The reason is that the money to cover the value of paper being issued has not been printed yet.

 

[vicirek]

I've read in a recent article that an order gets confirmed in just 35 microseconds, ie. in 0.000035 seconds.
And in just 1 millisecond (that's 1/1000 of a second) the following is possible:
a highspeed trader (HFT) can in that time do 500 times issue a modification order (ie. change the order) and 150 times execute a trade.
Source (in German): http://dist.algotrader.ch/wp-content/uploads/2016/02/BILANZ_HighFrequencyTrading_2016_02.pdf

So it means that HFT is white noise.