High frequency traders literally printing money!!! LITERALLY PRINTING MONEY!!!!

[risktaker]

I got news for you...

Narrow/tight spreads only benefit short term traders.
They are of practically no importance to *investors*.

As a matter of fact, I'd rather trade a market where the average stock spread is 5 cents instead of 1 bs penny.

At least the slimy scumbags known as HFT's won't be around trying to screw with my order.

Yes, I'd rather PAY 5 cents more per share in order not to have HFT's mucking up the prices ALL day!

HFT's do not create/add liquidity. They suck money out of transactions through the manipulation of prices.

What they do create is a FALSE sense of confidence in a shaky financial structure with "lots of liquidity".

The "liquidity" is there only thanks to dumb institutions trading. As soon as the dumb money stops or cannot trade, the HFT's conveniently shut down.

Quote from propseeker:

this quote is pure bullshit. here's why:

a market's VALUE is primarily based on its LIQUIDITY. why? because liquidity REDUCES the cost of trade with smaller bid/ask spreads and INCREASES potential PROFITABILITY by allowing the absorption of larger investments.

but HOW does a market become liquid? a market can only be liquid if trade is ACTIVE. trade can only be ACTIVE if there are a significant number of participants willing to MAKE A MARKET, ie, willing to make SMALL MARGIN PROFITS on the bid/ask SPREAD. by definition, these short term traders provide liquidity for long term traders and enable TRADE to happen at a MUCH REDUCED COST than if long term investors were forced to TRADE with other long term investors.

the more ACTIVE a market it is, the HIGHER it's liquidity becomes, and the more INVESTMENT it ATTRACTS. this is what makes the US markets THE primary stock markets in the world.

wrt to gambling, market making returns are MUCH LESS akin to gambling with their tight risk controls and their balanced value books vs the large directional trades many investors put on. at the end of the day though, everyone should be FREE to put on any type of trade they want within their means. THIS is the definition of FREE MARKETS. the only thing the quotes above serve to do is to UNDERMINE free markets by using emotional rhetoric to favor one market participant over the other WITHOUT REGARD for BASIC MARKET PRINCIPLES.

a final analogy in practical terms, to drive it home... i'm a large investor in physical copper in china, and am going to be warehousing it in a facility and then later resell to local industry as the price rises as i expect. first i need to buy the copper from chile. if it weren't for SHORT TERM TRADERS that were willing to finance the infrastructure of transport and be willing to make the spread between the two countries, then I WOULD HAVE TO DO THAT MYSELF. my costs would SKYROCKET and it would no longer make the investment worthwhile. as a result, i the huge buyer, would not have as a great of demand for copper and the producer would not have as a great of a market to sell into.

THAT is basic market dynamics and can be broken down into smaller and smaller timeframes offsetting the costs and risks of trade and investment as you go down the chain. undermine these basic tenets of trade, and you WILL undermine markets in general hurting EVERYONE.

 

[Jerkstore]

Quote from stock777:

propseeker is a shill for hftscum. Ignore his words.

I do disagree with at least some of propseeker's opinions. However, he knows a lot about market structure, and supports his opinions.

Therefore I find value in reading his posts. Please don't lower the conversation into namecalling. That helps no one.

 

[MarketMasher]

Quote from propseeker:



a market's VALUE is primarily based on its LIQUIDITY. why? because liquidity REDUCES the cost of trade with smaller bid/ask spreads and INCREASES potential PROFITABILITY by allowing the absorption of larger investments.

but HOW does a market become liquid? a market can only be liquid if trade is ACTIVE. trade can only be ACTIVE if there are a significant number of participants willing to MAKE A MARKET.

But is HFT really liquidity though? If HFT algos pull their bids in unison (or close enough to it) and a very large % of volume is from HFT, isn't that the equivalent of the market having a massive heart attack?

Maybe HFT's are "conditional liquidity" that can all be withdrawn in nanoseconds. Then the bid/ask spreads become like they did on May 6th.

 

[promagma]

Quote from risktaker:

Narrow/tight spreads only benefit short term traders.
They are of practically no importance to *investors*.

As a matter of fact, I'd rather trade a market where the average stock spread is 5 cents instead of 1 bs penny.

At least the slimy scumbags known as HFT's won't be around trying to screw with my order.

Just do a market order ... they can't frontrun you and the tight spread from HFT saves you a few cents!

Why all the whining

 

[kinggyppo]

Quote from Jerkstore:

I do disagree with at least some of propseeker's opinions. However, he knows a lot about market structure, and supports his opinions.

Therefore I find value in reading his posts. Please don't lower the conversation into namecalling. That helps no one.

agreed I have learned from you as well. Let's try to stick to the issues,
can someone comment on the ISO orders, intermarket sweep orders. The stuff I read over at traderworx is saying that some houses are using them to essentially "frontrun" competing orders. Can someone speak to that intelligently and without bitterness. see attached page 12 about ISO orders.

 

[Drock409]

At the end of the day everyones crying about HFT is nothng but crying, its not gonna go away. Tradeworks will probably go 40 years without a negative day.

if 50 or 60 or 70 % of the volume is done by these guys...then they are paying 50 or 60 or 70% of all the SEC fees

think about that for a second, we are talking about hundreds upon hundreds of millions of dollars

they may rig it so only large institutions can play the game instead of these fragmented troublemakes ...but i highly doubt the concept is going away

so crying about these guys...AS MUCH AS I HATE THEM... will do nothing cause they are not going away

if you look at Tradeworx report...their avg profit after everythying is about .0002 so the SEC is basically their partner in this entire deal (as well as yours and I's..but i'm hoping most people here make more than just rebates as a way of trading)


that being said...if all ECNS changed their fee structure from + .002 to add and -.003 to remove to 0 to take and -.001 to remove
This theoritically would allow the ecns to make the same amount of money ..but its not the case as most HFTS would cease to exist and SEC and ECNs both lose out on hundreds of millions of dollars.

the hft's live on the rebates...thats their game...the bigger the rebate the more they post "liquidity" the more they frontrun ur order the more they and the SEC makes , the LESS CHANCE of you getting a good fill on the bid or an institution gettin its entire order filled quickly.


MOST of us hope they will be stopped...and i agree with an earlier poster that 5c spreads woule be better for us and institutions getting fills and I have actually seen research about that exact topic, but the reality is ..its not gonna happen...and lets just say if it does I'll be prepared...and if it doesnt...Its ok also..i've already adapted


not gonna happen

 

[d138]

Quote from kinggyppo:agreed I have learned from you as well. Let's try to stick to the issues, can someone comment on the ISO orders, intermarket sweep orders. The stuff I read over at traderworx is saying that some houses are using them to essentially "frontrun" competing orders. Can someone speak to that intelligently and without bitterness. see attached page 12 about ISO orders.

Here is the irony. RegNMS and ISO orders were designed by regulators to protect the individual investor. I.e. if exchange A has a price worse then exchange B, investor can't trade on exchange A, the order will be routed to exchange B.
However as of results of this average investor (a) can't post on exchange A even if it took all liquidity there (b) practically can't take on liquidity on exchanges A and B at the same time.

 

[propseeker]

Quote from risktaker:

I got news for you...

Narrow/tight spreads only benefit short term traders.
They are of practically no importance to *investors*.

As a matter of fact, I'd rather trade a market where the average stock spread is 5 cents instead of 1 bs penny.

At least the slimy scumbags known as HFT's won't be around trying to screw with my order.

Yes, I'd rather PAY 5 cents more per share in order not to have HFT's mucking up the prices ALL day!

in a market with no short term traders, you'd be paying spreads that are nowhere near a nickle. try hundreds of basis points (5% variance would not be unrealistic).

a good example of what a market would look like without a large quantity of short term traders simply due to logistics is real estate. spreads between buyers and sellers in that marketplace routinely are huge and in any kind of 'liquidity crisis' you consider yourself lucky if you can even find a bid. another simple place to observe low short term/market maker presence are in some of the harder to hedge ETF's. no nickle spreads there either.

think about it. if everyone is a long term investor, how is trade facilitated? answer, it's not, at least not easily.

 

[propseeker]

Quote from stock777:

did you know that the ex soes bandits were heavily involved if hft infrastructure?

went from one racket to the next.

no one talks about this because

1) clueless
2) banking

i don't know about everyone else, but i don't talk about this because of banking...

 

[propseeker]

Quote from kinggyppo:

agreed I have learned from you as well. Let's try to stick to the issues,
can someone comment on the ISO orders, intermarket sweep orders. The stuff I read over at traderworx is saying that some houses are using them to essentially "frontrun" competing orders. Can someone speak to that intelligently and without bitterness. see attached page 12 about ISO orders.

i'm pretty sure i answered this question already, look a few pages back in this thread... maybe page 17/18. also, read page 17 of that pdf you linked to for a good example given by tradeworx.