hey HFT scum, yeah, you. Watch this
- Thread starter stock777
- Start date
Hmm, this is a very interesting contribution. You sound you defend HFT yet you deliver all the arguments why the market structure should urgently be changed.
You described perfectly well the gripe many traders (large and small) have. However, where the criticism about HFT comes into play is about sub-pennying. There is an absolute problem with this structure if HFT can do it but I on the retail side cannot do it. Simple as that. I thought most of participants came to the same conclusion many pages ago.
The availability of dark pools alone invite countless opportunities to front-run, to benefit certain parties at the expense of others, and intransparent markets one of the pillars of efficient and equitable markets.
How to change it? Force all market participants to return to a regulated, transparent exchange where ALL orders are visible and EVERYONE has the very same execution capabilities. We dont need dark pools, nor does ANY portfolio manager or hedge fund trader. Heck, force the exchange to offer the capability for anyone to become a price maker if they chose so. But what we need is a market place where you don get front-run by someone with perks that were not afforded to me for whatever funny reasons.
In finance creating ever more complex products and ways to execute has NEVER benefited the industry over the long-term, it has every time caused problems, mostly issues of trust and fairness. And I say this as someone who has worked for over 10 years on the sell-side and worked intensively and close with buy side clients.
You described perfectly well the gripe many traders (large and small) have. However, where the criticism about HFT comes into play is about sub-pennying. There is an absolute problem with this structure if HFT can do it but I on the retail side cannot do it. Simple as that. I thought most of participants came to the same conclusion many pages ago.
The availability of dark pools alone invite countless opportunities to front-run, to benefit certain parties at the expense of others, and intransparent markets one of the pillars of efficient and equitable markets.
How to change it? Force all market participants to return to a regulated, transparent exchange where ALL orders are visible and EVERYONE has the very same execution capabilities. We dont need dark pools, nor does ANY portfolio manager or hedge fund trader. Heck, force the exchange to offer the capability for anyone to become a price maker if they chose so. But what we need is a market place where you don get front-run by someone with perks that were not afforded to me for whatever funny reasons.
In finance creating ever more complex products and ways to execute has NEVER benefited the industry over the long-term, it has every time caused problems, mostly issues of trust and fairness. And I say this as someone who has worked for over 10 years on the sell-side and worked intensively and close with buy side clients.
Dude, of course it is fraudulent when those who sign exchange and broker agreements and are promised fair and equal routing and execution are frontrun by someone who can put in bids and offers on such fine-grained levels that I cannot. We rather ought to ask the question, WHAT IS NOT FRAUDULENT ABOUT THIS?
Seriously, you think some of the HFT operators and dark pools moved away from subpennying and other near-fraudulent activities because they were all operating in an environment that was treating all market participants equally? Give me a break. You seem to know what you talk about but your extreme bias makes you conveniently overlook reality. By the way your claim it only disadvantages small retail boys and girls is factually incorrect. Several execution traders for LARGE mutual fund outlets claim they are not so sure anymore the advantages of dark pools outweigh the draw backs. They say the visibility that has vanished with this type of market structure seriously bothers them immensely.
Seriously, you think some of the HFT operators and dark pools moved away from subpennying and other near-fraudulent activities because they were all operating in an environment that was treating all market participants equally? Give me a break. You seem to know what you talk about but your extreme bias makes you conveniently overlook reality. By the way your claim it only disadvantages small retail boys and girls is factually incorrect. Several execution traders for LARGE mutual fund outlets claim they are not so sure anymore the advantages of dark pools outweigh the draw backs. They say the visibility that has vanished with this type of market structure seriously bothers them immensely.
Of course I can and I would love to, problem is that I get again beaten by 0.01 cents. What a game. I know it will change, I know most HFT will be blown away, I know dark pools will go, but I just hope it will be sooner than later. They have done enough damage.
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.
Damage to who? Day traders such as yourself? Big deal. Retail investors are benefitting from the dark pools and the sub-pennying. As are large volume traders who can move size without distorting/moving/disrupting the markets (good or bad).
I agree that it isn't the best situation from a market structure standpoint, but arguing that it isn't benefitting the market is a losing argument. In the minds of Congress, the small retail investor is the market.
No one, and I mean no one, is going to care that a day trader isn't getting filled on orders that he feels he should be filled on when Joe Plumber is getting better execution in his retirement account.
The only argument that has a hope of fixing this situation is one of market structure. And until thats figured out, nothing is going to change.
I am not a day trader, I thought that became apparent by now.
You talk all the time in terms of theoretical concepts. Lets see how it works: Why dont you describe to us why you necessarily get a better price through a dark pool than through the exchanges. Because I have not seen it on a consistent basis, and I want to bet that I executed a multiple of shares in my life time than you did.
Next question: Why does it benefit retail investors? Are you dumb? I have a hard time to conclude else because after debating over many pages why it disadvantages retail traders you come out to tell the world it "provides benefits to retail traders". I find this pretty retarded to say the least.
"It benefits the whole market"? So why are people then having a hard time with this whole concept of unfair execution capabilities? Seriously, are you drunk or something?
Where do you get better fills in your retirement account? Through your mutual fund? We start again at the beginning. Lets say the execution trader for Fidelity routes to a dark pool, where is it guaranteed he gets better execution than elsewhere? It is NOT, thats why discretionary execution traders start to question the WHOLE FUXXING MODEL. The parties that benefit (and that through unfair practices) are HFT. Seriously, you sound you have ZERO experience as part of a front office of an investment bank, or hedge fund or buy side investment firm. Yet you speak as if you know how the "big fish" benefit. Sorry but you simply dont sound like someone who had a whole lot of exposure to this market segment.
Dont mix everything up and sell a piece of shit for a diamond. It makes you look stupid!
You talk all the time in terms of theoretical concepts. Lets see how it works: Why dont you describe to us why you necessarily get a better price through a dark pool than through the exchanges. Because I have not seen it on a consistent basis, and I want to bet that I executed a multiple of shares in my life time than you did.
Next question: Why does it benefit retail investors? Are you dumb? I have a hard time to conclude else because after debating over many pages why it disadvantages retail traders you come out to tell the world it "provides benefits to retail traders". I find this pretty retarded to say the least.
"It benefits the whole market"? So why are people then having a hard time with this whole concept of unfair execution capabilities? Seriously, are you drunk or something?
Where do you get better fills in your retirement account? Through your mutual fund? We start again at the beginning. Lets say the execution trader for Fidelity routes to a dark pool, where is it guaranteed he gets better execution than elsewhere? It is NOT, thats why discretionary execution traders start to question the WHOLE FUXXING MODEL. The parties that benefit (and that through unfair practices) are HFT. Seriously, you sound you have ZERO experience as part of a front office of an investment bank, or hedge fund or buy side investment firm. Yet you speak as if you know how the "big fish" benefit. Sorry but you simply dont sound like someone who had a whole lot of exposure to this market segment.
Dont mix everything up and sell a piece of shit for a diamond. It makes you look stupid!
1. I said it benefits the small retail INVESTOR. Clearly sub-pennying hurts traders (large or small).
2. Congress isn't going to care about traders, they are going to care about Main St. They aren't going to care about Wall St in any of its forms.
3. Have fun in your little dick wagging contest, I've been doing this too long to even contemplate participating.
4. I never made a blanket statement regarding getting a better price through a dark pool. I said that a small retail investor utilizing a market order that is routed through a dark pool (knowingly or unknowingly, primarily unknowingly) through the use of an IOI is more than likely going to get sub-pennyed, which by definition, improves their execution. I didn't state where they were executed.
5. Sub-Pennying generally helps those using market orders and it hurts those that use limit orders.
Easy enough concept and certainly not something to fly off the handle about. The structure of the market isn't properly aligned presently and needs to be fixed, that we agree upon. You, for some reason, seem fixated on vilifying the HFT's and quite frankly, they are acting perfectly rational (and legally for that matter). You might not like it, but like I said, you're blaming the wrong entity for the problems you've correctly identified.
EDIT - Didn't respond to all your comments so felt like I should add a bit more.
I wouldn't classify myself as a small retail investor. So given that, I dont' benefit from Sub-Pennying. Given a portion of my income comes from trading the equity/futures market, if anything, it hurts me.
Next, it doesn't benfit the whole market. A "broken" market structure by definition hurts the overall market. My point was that a small subset of the market generally benefits (small retail investors) and the problem that will at some point need to be faced is that this small subset of the market votes, and like it or not, Washington panders to the voters (whether thats an intelligent thing to do or not).
You also seem fixated on the issue of a professional trader getting better execution in a dark pool. The only comment I made is that entities that are trying to move large size orders can more easily do that without distorting/moving the market through a Dark Pool. Do they always get better or comparable execution to the public markets? No. Do they always get executed? No.
Lets play pretend for a second, I'm a small retail investor trying to buy 100 shares of stock. NBBO on the stock is 17.72-17.78 presently. I send in a market buy order. If I route the order directly to the exchange where the best offer is shown, I'd pay $1,778 plus commissions. In my experience, if I route the order through a Dark Pool, I typically get executed a fraction of a penny (tenth of a penny in this case) below the indicated offer, so instead of $1,778, I pay $1,777.90. Is it meaningfully lower? No. Is it lower? Yes. So while I'm not benefitting wildly, there is a benefit. The losing party is the party that was showing the $17.78 offer on the exchange. They don't get filled when they otherwise would have.
My whole point was, is, and will continue to be that arguing that this isn't "fair" isn't goin to fly with the politicians because they are too stupid to understand. All they are going to hear is that you are arguing that a small retail investor managing his own account should be paying more for stock versus what they could be paying today. That's a losing argument.
A winning argument is one of market structure.
As I said, we're on the same side of the argument, we just have very different opinions as to how to approach a solution.
2. Congress isn't going to care about traders, they are going to care about Main St. They aren't going to care about Wall St in any of its forms.
3. Have fun in your little dick wagging contest, I've been doing this too long to even contemplate participating.
4. I never made a blanket statement regarding getting a better price through a dark pool. I said that a small retail investor utilizing a market order that is routed through a dark pool (knowingly or unknowingly, primarily unknowingly) through the use of an IOI is more than likely going to get sub-pennyed, which by definition, improves their execution. I didn't state where they were executed.
5. Sub-Pennying generally helps those using market orders and it hurts those that use limit orders.
Easy enough concept and certainly not something to fly off the handle about. The structure of the market isn't properly aligned presently and needs to be fixed, that we agree upon. You, for some reason, seem fixated on vilifying the HFT's and quite frankly, they are acting perfectly rational (and legally for that matter). You might not like it, but like I said, you're blaming the wrong entity for the problems you've correctly identified.
EDIT - Didn't respond to all your comments so felt like I should add a bit more.
I wouldn't classify myself as a small retail investor. So given that, I dont' benefit from Sub-Pennying. Given a portion of my income comes from trading the equity/futures market, if anything, it hurts me.
Next, it doesn't benfit the whole market. A "broken" market structure by definition hurts the overall market. My point was that a small subset of the market generally benefits (small retail investors) and the problem that will at some point need to be faced is that this small subset of the market votes, and like it or not, Washington panders to the voters (whether thats an intelligent thing to do or not).
You also seem fixated on the issue of a professional trader getting better execution in a dark pool. The only comment I made is that entities that are trying to move large size orders can more easily do that without distorting/moving the market through a Dark Pool. Do they always get better or comparable execution to the public markets? No. Do they always get executed? No.
Lets play pretend for a second, I'm a small retail investor trying to buy 100 shares of stock. NBBO on the stock is 17.72-17.78 presently. I send in a market buy order. If I route the order directly to the exchange where the best offer is shown, I'd pay $1,778 plus commissions. In my experience, if I route the order through a Dark Pool, I typically get executed a fraction of a penny (tenth of a penny in this case) below the indicated offer, so instead of $1,778, I pay $1,777.90. Is it meaningfully lower? No. Is it lower? Yes. So while I'm not benefitting wildly, there is a benefit. The losing party is the party that was showing the $17.78 offer on the exchange. They don't get filled when they otherwise would have.
My whole point was, is, and will continue to be that arguing that this isn't "fair" isn't goin to fly with the politicians because they are too stupid to understand. All they are going to hear is that you are arguing that a small retail investor managing his own account should be paying more for stock versus what they could be paying today. That's a losing argument.
A winning argument is one of market structure.
As I said, we're on the same side of the argument, we just have very different opinions as to how to approach a solution.
bull.
shit.
cramer is sucking obama's kneecaps for appointment as sec chairman. as if he has a chance. please.
can't anyone think for themselves without some self-proclaimed false messiah brainwashing them for his own gain?
are y'all really that stupid as to think hft has nowhere to go but up?
surely you jest.
shit.
cramer is sucking obama's kneecaps for appointment as sec chairman. as if he has a chance. please.
can't anyone think for themselves without some self-proclaimed false messiah brainwashing them for his own gain?
are y'all really that stupid as to think hft has nowhere to go but up?
surely you jest.
for someone who has demonstrated knowledge of the issues you are being remarkably disingenuous. if saving the retail investor money by subpennying is so important then why stop there? why not let everyone do it? the more people allowed to subpenny the more main street will save. we don't need to argue to congress to close this loophole but to open it up so wide then everyone can do it.
the two tiered market is the problem. whatever the rules and regulations are mean nothing. they only have a detrimental impact when they are applied to a certain segment at the expense of others.
if you can't make an argument why we should keep a two tiered system then you have no argument.