hey HFT scum, yeah, you. Watch this
- Thread starter stock777
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Quote from DarthSidious:
If these are the quality of replies we have on ET, just imagine what John & Jane Q. Public thinks about HFT. And we have so many threads wondering why government is getting into every single facet of our lives. BECAUSE WE ARE ASKING THEM TO, and they are happy to oblige. Every single fricking thing that inconveniences anyone - "there ought to be a law for that!"
You and I think alike. Would like to have one new law passed though: A law requiring that before any new law can go into effect an old law must be repealed.
It's not fraud and it's perfectly legal given the way our markets are currently structured. You may disagree with that structure, but that doesn't mean anything is fraudulent.
Your bid isn't being hit and you're getting sub-pennied because the person trying to buy shares first route their order (knowingly or unknowingly) through a dark pool by way of an Indication of Interest (almost every brokerage does this now unless you specify otherwise). Once this is done, the nature of the order becomes public knowledge and others can act on it (in this case, getting a better bid into market before the market order gets there, again, nothing illegal or fraudulent going on). At this point, it's quite easy for an HFT to step in and "sub-penny" your bid. The seller gets a better print than they otherwise would have (and is happy) and the HFT succeeds in picking up shares (also happy), which they will quickly flip. You're left wondering what happened and why your bid wasn't hit (not happy at all). (note this generally works to the advantage of small participants and to the disadvantage of large participants in the market for obviousl reasons).
Blame the seller, not the HFT for routing their order to a dark pool first in search of a better execution than the NBBO. Had the seller simply hit the bid on the exchange where you'd posted it (rather than routing dark first), you'd have gotten your shares. Instead they chose to try to better that level and ended up doing just that.
Problem that I see is that you are blaming the wrong entity. The HFT is not to blame for you not getting the shares you sought, the HFT is simply acting rationally (and legally) based on the information available.
The problem is one of market structure (which has obviously changed with the advent of dark pools among other changes both structural and regulatory related). Dark pools are clearly benefitting certain sectors of the market and disadvantaging others (traders like yourself specifically). Fix the structure and the subpennying will go away.
How to implement the fix? Thats the hard part. You're basically arguing that investors (the entity on the other side of the trade you're trying to execute) deserve worse fills than they are presently getting. That's not going to sit so well with a lot of market participants and isn't likely to sit well with Congress which is where this question is likely to end up.
we know it's not illegal,but it isn't fair, when someone can place an order with 0001 after decimal point on front of your order and you can't.it's not fair when brokers,data feed providers are not displaying those trades correctly,accurately. they, instead, like everybody else round data to 2 decimal points and display it to us. it is clear at least to me that US markets are structured today purposely to have an advantage over retail traders\investors. The fix is simple-forget hft,colocation and all that shit. either just allow retail brokers to place subpenny orders or stop this bs altogether. it's actually should be really simple for exchanges to stop accepting orders with 3 digits or more, but for some reason they not interested in that.
I won't disagree that the present structure is unfair to the small trader, but not fair doesn't equal fraudulent and that was the post I was specifically responding to. There is nothing fraudulent going on. Unfair potentially, but fraudulent, no. There's no frontrunning going on either. If an order is public knowledge and I can get in front of it, I've done nothing wrong. The fact that you can't act faster isn't my, or anyone else's, fault.
The system is rigged against the small trader, not the small investor. Small investors are likely getting better fills than they otherwise would have through the use of IOI's and dark pools, they are clearly benefitting under the current system. Small traders, specifically small/independent traders that have historically made money by adding liquidity, are the one's being hurt.
That brings up the question, just how big a portion of the overall market are "small/independent traders". I would suspect that group makes up a very, very small overall portion of the market such that the groups benefiting from this HFT practice greatly outnumber the the group that is being hurt. But I will allow that my hypothesis is just that and subject to being proved wrong (which wouldn't upset me in the least).
That said, I do agree with you. Either allow sub-penny trade entries or don't, but don't have dual systems.
I got a better fix. Don't be cute with your limit orders.
Move a penny higher on the bid or a penny lower on the offer. That beats the subpenny guys every time.
That is unless your strat can handle the penny difference. Whose fault is that?
If it can't then you have no complaints other than the fact you can't co-locate and sub increment like the big dogs.
Move a penny higher on the bid or a penny lower on the offer. That beats the subpenny guys every time.
That is unless your strat can handle the penny difference. Whose fault is that?
If it can't then you have no complaints other than the fact you can't co-locate and sub increment like the big dogs.
that's it right there. allow everyone to subpenny or don't allow anyone. the solution is remarkably smiple. when I curse the very existence of HFT it's just subpennying I'm referring to. if HFT can make trillions of dollars w/o subpennying and front running then more power to them. and if they want to sub penny to the billionth of the cent that's fine too, so long as everyone else can do it.
Quote from SunTrader:
I got a better fix. Don't be cute with your limit orders.
Move a penny higher on the bid or a penny lower on the offer. That beats the subpenny guys every time.
That is unless your strat can handle the penny difference. Whose fault is that?
If it can't then you have no complaints other than the fact you can't co-locate and sub increment like the big dogs.
i think you don't understand the problem...or never experience it..
regardless to where you are -there is always will be somebody at same price as yours(it will appears like that on your monitor, but in reality -price of another order will be higher by fraction of the penny) and you not going to get the shares, UNTIL someone step on your bid or offer. even if the spread is only 1 penny you will be always last in line