Exactly. How can computers compete with these crazy humans?
HFTS, how can humans compete with these crazy computers?
- Thread starter RabidTrader
- Start date
Exactly. How can computers compete with these crazy humans?
Black Monday of August 24 2015 is proof that HFT and the resulting instantaneous cross-correlation between the markets has made swing trading much more difficult and dangerous as well. Posts on other forums suggested losses exceeding 100K USD for ES swing traders that morning. The market then went on to rally throughout that day after the HFT-induced sell-off ended.
"it was not possible to calculate the value of indices/ETF net asset value, or hedge or trade ETFs and stocks at a ‘correct’ price,” Marko Kolanovic, JPMorgan’s global head of derivative and quantitative strategies, wrote in the report. Kolanovic argued that HFT firms “tend to dial down or completely step away during periods of high volatility or large market dislocations.”
http://www.newsmax.com/Finance/Markets/HFT-ETF-flash-crash/2015/09/25/id/693339/
The HFT algorithms determine what is news-worthy and when liquidity will disappear. Day traders don't have a list of news reports and what time they're going to be released each day. A year ago "ebola" being mentioned by the CDC started a < 1-minute HFT spike then sell-off across the US index futures.
I know why price action teachers are denying that the markets have changed.
May I suggest what you are referring to is simply a repricing to fair value based on new information in public domain.
The point is the speed by which price is repriced at is not compatible with point-and-click price action scalping.
Lack of liquidity and the vertigo-inducing speed of HFT are two SEPARATE issues associated with HFT both have a strong negative influence on most day traders' P&L.
Yes it can move 20 points and it has relevance. But you don't say what the relevance is. So what's the use of your statement? What's the exact relevance?
Most people are so lazy that they don't do what is the most important part of these 20 points moves observations: watch what happened according to your tradingsystem at the time when this moves happened. Because only the impact on your trading is important, all the rest is unimportant.
- So I took all the 1 minute data since 1/1/2015 and selected all the minutes where the difference between high and low was 10 points or more.
- I checked according to my system what my position was at that time to see if I would be harmed from it or if I would have benefited from it.
- there were only 4 days that these moves (10 points or more) happened for a total time of 23 minutes.
- I would have taken 1 hit when the market moved against me 8.25 points in 1 minute. My stop is at 3 points so I probably was out with a smaller loss than 8.75, but surely bigger than 3 points.
- or flat
- or in the good direction taking the move in profit
- or in the good direction taking the move in loss. I mean that my position was open at the time of the move, the move reduced my profits without turning it in an open loss, and then returned to the direction of my position, ending in a profit.
The risky periods represented 23 minutes on a total of 76923 minutes or 0.0299%. Would you stop daytrading because 0.0299% of the time you might take a big hit. I would not stop. But I use a small part of my capital, so even a blow up wouldn't harm me at all. I would be able to start again immediately. The only negative is that for this safety I had to give up the possibility to become the richest man on earth. But I never had any ambition to become that man, so even this is not negative.