HFT Myths

[stock777]

Dont feed the troll. He is repeating same jokes for ages. He isnt seeking an honest discussion.. Just another internet troll. Replying you only chance to bloat this thread to something unreadable (perhaps its his objective)..

london? thats where all the real thieves are.

 

[elliots11]

60 minutes did a whole show about hft and I must say hft looks like legalized front running

 

[maxima120]

Yes Elliot.. Your comment reminded me an old story.

Isaac is chatting with Haim..
I - You know - I don't like Mozart..
H - when did you manage to get to a concert?
I - what? am I daughter of a millionaire.. concert.. meh.. Moisha whistled the tune over the phone ..

 

[elliots11]

Your point? Did you. View the show because there were compelling claims.

 

[trade_canada]

60 minutes did a whole show about hft and I must say hft looks like legalized front running

There's so much more to it than any TV program can present to an audience of 'market illiterate' viewers.

Yes, latency offers an advantage to participants who are willing to invest massive amounts of capital to put themselves in a position to exploit that edge. The claim that the equities market is 'rigged' is bullsh*t, as a long term investor you still have the same odds of making money regardless of minor slippage incurred when executing.

While the ethics of that advantage are up for debate, I truly believe that market makers are necessary and there has to be some kind of incentive for them to be present in a market.

 

[elliots11]

Hft are not market makers they are professional traders.
Prove to me that hft is not front running
Calling me market illiterate does not add to the discussion

 

[stock777]

no, contrary to popular rumor , I am not Michael Lewis, he just figured it out, Ive been hounding you imbeciles for 5 years.

 

[elliots11]

Anyone care to dispute the claim that hft is front running? Or is the best argument for hft is insults? Come on now

 

[kinggyppo]

Anyone care to dispute the claim that hft is front running? Or is the best argument for hft is insults? Come on now

please define front running and give an example of how it is illegal in hft terms, being first in queue is not illegal ie latency arbitrage.

 

[trade_canada]

Hft are not market makers they are professional traders.
Prove to me that hft is not front running
Calling me market illiterate does not add to the discussion

I didn't say "elliots11 is market illiterate", my point is that the target audience of programs such as 60 minutes aren't well versed in the microstructure of electronic markets.

With regard to front running, if you look back to my post I did mention that latency is an edge. 'Front running' by HFT's is achievable because of their latency advantage, I'm not denying this. Before market makers went off-floor they absolutely used their 'proximity' to the order flow to their advantage. They took the risk of quoting both sides of the market in return for a more in depth view of the order flow, which helped them quote profitably.

Of course market makers are professional traders, they wouldn't have the capital required to invest in running such an operation if they weren't pro. There are definitely HFT market makers. Take a look at the various designated market maker schemes out there, good luck finding a participant that isn't high frequency.

There are obvious cases of abuse in electronic markets; quote stuffing, quoting false size, stressing thin markets intentionally etc. Some kind of distinction between high frequency participants is much needed, a few bad apples don't need to ruin the whole bunch (needed at least 1 cliche or my head would explode).