HFT GOOD or Bad for Market

[Roxiticus]

Those of us that have been trading individual stocks for many years have found it almost impossible to make money anymore due to HFT.
Very successful traders i know have given up trading completely. The HFT programs seem to rob you on both sides, when i want to get on a stock that has started to move up i cannot get filled at a decent price and as soon as i do they drive the price against me 20 - 30 cents. Same on the sell or short side. Pro HFT guys say that they enhance liquidity, i say BULLSHIT!!!! you cannot get size on most stocks and if you try they just front you and drive the price higher.

Does HFT make it harder to make money daytrading?

 

[Locutus]

Quote from Roxiticus:

You cannot get size on most stocks and if you try they just front you and drive the price higher.

If their behaviour is this predictable just exploit it and take their lunch.

 

[222bc]

HFT is higher on the evolutionary chain then the VST and snatch some of it's bread.

Considering that many of the HFT also trade against each other they do create liquidity that otherwise would not exist.

As for the public, electronic trading is 10x fairer then dealing through "specialists". In the good old days one would always get the high of the spread when buying and the low when occasionally selling on market orders. Now I often get better then what I realistically expect.

The other day (half asleep) I entered an option order somewhat away from the last transaction by clicking on buy instead of sell (on a limit). Of course it got filled. I immediately hedged it with stock to prevent further damage.
Overnight I was in an unwanted locked position with a slight loss.

Apparently some kind of a program at the brokers recognized the improbable option fill and to my surprise (without my asking for it) busted both the option and stock position. I can't quite figure it out how it was done because they were not the seller of the option.
But, as they say: don't look the gift horse in the mouth.

bc

 

[julian0625]

Quote from Roxiticus:

Those of us that have been trading individual stocks for many years have found it almost impossible to make money anymore due to HFT.
Very successful traders i know have given up trading completely. The HFT programs seem to rob you on both sides, when i want to get on a stock that has started to move up i cannot get filled at a decent price and as soon as i do they drive the price against me 20 - 30 cents. Same on the sell or short side. Pro HFT guys say that they enhance liquidity, i say BULLSHIT!!!! you cannot get size on most stocks and if you try they just front you and drive the price higher.

Does HFT make it harder to make money daytrading?

Ok go back in time and day trade in the 1920's where comission on every trade was $100. Choose your poison.

Look, bottom line is, the point of a trader's career is to ADAPT TO CHANGING MARKET CONDITIONs. HFT affect that condition. If you think that HFT is making you lose money, your not cut out to be a trader.

Plus as Locutus said, if you know that they are going to "run your stops" or whatever, just do what they do... isn't that a no brainer, right?

Also yes HFT increases liquidity. If it weren't for HFT 70% of the volume would be gone. That would absolutely kill the exchanges. 10 years ago you wouldn't have been able to hit a 500 contract order in the ES without slippage. Now? It doesn't do a thing. In other words, there is no question that HFT increased liquidity.

 

[emg]

Quote from Roxiticus:

Those of us that have been trading individual stocks for many years have found it almost impossible to make money anymore due to HFT.
Very successful traders i know have given up trading completely. The HFT programs seem to rob you on both sides, when i want to get on a stock that has started to move up i cannot get filled at a decent price and as soon as i do they drive the price against me 20 - 30 cents. Same on the sell or short side. Pro HFT guys say that they enhance liquidity, i say BULLSHIT!!!! you cannot get size on most stocks and if you try they just front you and drive the price higher.

Does HFT make it harder to make money daytrading?

HFTs are awesome. They bring liquidity in the market. Only the strong minded trader that has substantial capital will win, while the weak minded trader with small capital will lose against the HFT.

More than 90% of small traders lose. They just lose!!

 

[222bc]

There seems to be a confusion in this conversation about the impact of HFT because people chime in without specifying which kind of trading they practice.

It depends on the time scale of the trader.

If you are going for a few ticks VHF's are your competition but if you buy AAPL on Monday and sell on Wednesday $20 higher or lower their presence does not alter your outcome. It probably helps that they contribute to the depth of the market on both sides.

The traders who moan about current trading conditions would hope that they were no competent adversaries in the arena and then they could rule.

They were times when it was that easy but I guess the efficient market theory has tooth to it and fighting for ticks has become more competitive.

In the jungle the native hunters learn the ways of the pray and succeed.
In the market you have to learn the nature of price movement and you will prosper if you can manage yourself.

Be happy and prosper,

bc

 

[stock777]

Quote from Locutus:

If their behaviour is this predictable just exploit it and take their lunch.

shmuck, the whole point is they are not all that predictable.

you have to love these posers who claim they mint money trading against hft. no proof, just pose.

 

[traderpro]

They add liquidity to the markets, My 2 cents, they will put rules in place to slow them down on top of fees to run this strat. The HFT traders are just exploiting the markets but they do bring the markets revenue. I have tried this HFT trading and its not for me, more money if you learn how to trade the markets but some i hear do ok trading HFT style.

 

[SteveNYC]

Quote from Roxiticus:

Those of us that have been trading individual stocks for many years have found it almost impossible to make money anymore due to HFT.
Very successful traders i know have given up trading completely. The HFT programs seem to rob you on both sides, when i want to get on a stock that has started to move up i cannot get filled at a decent price and as soon as i do they drive the price against me 20 - 30 cents. Same on the sell or short side. Pro HFT guys say that they enhance liquidity, i say BULLSHIT!!!! you cannot get size on most stocks and if you try they just front you and drive the price higher.

Does HFT make it harder to make money daytrading?

There needs to be a study on the impact of HFT before we jump to conclusions. If HFT adds liquidity to the market, then it's a positive b/c you get a fairer pricing. It's better to have more competition.

I remember 10 years ago at Worldco when I sent my buy order directly to the specialist on the NYSE and he/she would hold my buy order for minutes. Then he would fill it at the top of the day and tank the stock. Unbelievable. Now, with alternative routes of execution, I would get a faster and better fill. True story.

My gut tells me that HFT that plays buy the rules is a positive. Probably makes the market more efficient and fair b/c they are "arbing" out all the "holes" in the market so to speak.

It's evolution of the market.

It seems like HFTraders are being lambasted like day traders of 10 years ago.

Why are day traders so bad and looked upon as dregs of society?

Not all day traders sit in their underwear at home and randomly buy and sell.

Day trading is a business and day traders are entrepreneurs.

It's gotta be one of the toughest job in the life. We, day traders, deserve some respect.

 

[traderpro]

Quote from SteveNYC:

There needs to be a study on the impact of HFT before we jump to conclusions. If HFT adds liquidity to the market, then it's a positive b/c you get a fairer pricing. It's better to have more competition.

I remember 10 years ago at Worldco when I sent my buy order directly to the specialist on the NYSE and he/she would hold my buy order for minutes. Then he would fill it at the top of the day and tank the stock. Unbelievable. Now, with alternative routes of execution, I would get a faster and better fill. True story.

My gut tells me that HFT that plays buy the rules is a positive. Probably makes the market more efficient and fair b/c they are "arbing" out all the "holes" in the market so to speak.

It's evolution of the market.

It seems like HFTraders are being lambasted like day traders of 10 years ago.

Why are day traders so bad and looked upon as dregs of society?

Not all day traders sit in their underwear at home and randomly buy and sell.

Day trading is a business and day traders are entrepreneurs.

A lot of traders have left the game after the "bots" came into play. They just didn't adapt, the stocks end up reacting the same, the jiggles are more of a _____ and make those traders who left lose their patience. We all see the pivots, its learning the game within, the FLASH CRASH gave the HFT the bad rap but understand there are people who have their retirement in the markets and that day they got the sh!t scared out of them and this has to be addressed now. I have heard of them going back as far as 2002 (currently) to fine and ban traders who have had algo HFT strats and i think its wrong but the big boys(the govt) out there can do what they want.