Has HFT destroyed the small-mid cap stock arena?

[stock777]

Still seeing plenty of action in low volume names. Look at the charts, are you kidding me? Stuff moves 20% in a day, but trying to catch the low risk entry is a bitch. Too much like real work.

What you're really saying is you can't game them so easily, but the action is there. I spotted a move three days ago and the name is up 30% on 1 buyer. So obvious, it's almost comical. And there was enough liquidity for anyone to participate.

Not the stock, but just for laughs

 

[bears21]

I'm talking real low volume like less than 75k shares a day, these stocks were very manipulated but so easy to spot. But some of these would at least trade go look at daily volume on names like dhil,esgr,uslm,grif to name a few they flat out don't trade anymore. The programs at least facilitated trading now it's just dormant. It's not hft either no hft would touch these stock because there is nothing there to trade.

Still seeing plenty of action in low volume names. Look at the charts, are you kidding me? Stuff moves 20% in a day, but trying to catch the low risk entry is a bitch. Too much like real work.

What you're really saying is you can't game them so easily, but the action is there. I spotted a move three days ago and the name is up 30% on 1 buyer. So obvious, it's almost comical. And there was enough liquidity for anyone to participate.

Not the stock, but just for laughs

[/QUOTE]

 

[Grandluxe]

Quote from bears21:

I feel your pain bro right now I have been swing trading and trading a pairs system for the past year. Much more watching then eyeing level 2 and time and sales, also more boring. But it is still profitable and believe it or not I have been watching level 2 demo of how brazil trades and it's very similar to what we were use to seeing more pure following the liquidity. Not much automation mostly manual trading.

What software are you using for pairs trading analysis? One thing I notice is that many stocks which used to do their own thing are now extremely correlated with the market intraday.

 

[bears21]

i trade for coastal and we have a pairs platform called centauri. but you are correct those low volume stocks are very correlated to what the market is doing. they old days market could be down 100 pts and somebody would rip one of those stocks up for over a pt. for no reason.

What software are you using for pairs trading analysis? One thing I notice is that many stocks which used to do their own thing are now extremely correlated with the market intraday. [/QUOTE]

 

[Occam]

Quote from Grandluxe:

I found that has happened in US stocks as well. That whole space is dead. How long can this carry on? capital access is being impeded, everyone is trading C or BAC. wtf is going on

http://www.efinancialnews.com/story...rs-lament-small-and-mid-cap-liquidity-drought

...

Speaking at a Paris trading conference run by Knight Capital last month, Mark Northwood, global head of equity trading at Fidelity Investment Managers, said: “Investors like us have most difficulty in trading small and mid-cap stocks.

There is a lot of scrutiny on high-frequency trading and its effect on blue-chip trading, but the issues are most acute further down the market.”

Northwood’s comments follow a report, published by accountancy firm Grant Thornton in December, which found that one of the primary concerns of the 50 fund managers surveyed was dwindling levels of liquidity in small and mid-cap stocks.

Oh, the irony! Fidelity itself, on its retail brokerage side, is a significant source of one of the major problems that causes a lack of liquidity, which is broker-dealer internalization and off-exchange payment-for-order-flow deals. For many small/mid caps, orders almost never hit a real exchange, which in turn greatly reduces the incentive for anyone to provide obvious and genuine liquidity there.

If Fidelity wants to address the problem, they should stop internalizing and/or sending customer orders to PFOF firms, and petition the SEC to force other B/D's to do the same, which it seems many in the SEC would like anyway (although they encounter a lot of B/D resistance to the idea, as it's now free money and largely hidden for the B/D's, at the expense of their unwitting customers).