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

[DrPepper]

The pieces of the puzzle all seem to be fitting together now. I could never understand how we sustained such a consistent, low volume rally for over a year given the high rate of unemployment and other weak economic fundamentals. Sure, the Fed was printing money, but why was it ending up in stocks and why did stocks continue to rise on low volume? Now it makes sense that the HFTs were propelling the market higher and banks that got the low interest Fed money simply followed the trend.

However, the May 6 crash demonstrated that the market can go down much faster than it goes up. Since the US is doing nothing to cut spending or raise taxes, the likelihood of a bigger crash or even a collapse seems high.

An interesting, related article on this subject follows:

http://market-ticker.denninger.net/archives/2319-Ten-Things-For-2010.html

 

[WinSum]

Quote from promagma:

Funny that when HFT walked away, there was no bid in the market down to 0.01 on some stocks. Like I've said before in a debt-based economy there's almost no such thing as fundamentals.

These stocks sold down to 0 cents on that day. I wonder who are the numb nuts that hit a bid of 0.

IGM
IWV
BGS
BRO
BTF
IXC
GLAD
BWP
FXL
QCLN
RQI
RSP
DWX
DTN
VB
DKP
CII
GAR
VFH

 

[risktaker]

Quote from WinSum:

These stocks sold down to 0 cents on that day. I wonder who are the numb nuts that hit a bid of 0.

IGM
IWV
BGS
BRO
BTF
IXC
GLAD
BWP
FXL
QCLN
RQI
RSP
DWX
DTN
VB
DKP
CII
GAR
VFH

There are different ways that can happen...

If someone is selling a basket of 50+ stocks, & 1 or 2 of those stocks is way off, they might sell the whole basket at market without paying particular attention to which stock is now at 1 cent. Should be no problem in a normal market.

The other thing is, since these markets are electronic & the bids can disappear in a second, well maybe someone hit the bid when it was showing $30 & when the fake HFT bids disappeared, only the 1 cent bid was there.

 

[propseeker]

Quote from WinSum:

These stocks sold down to 0 cents on that day. I wonder who are the numb nuts that hit a bid of 0.

they're the same type of numb nut that are dominating this thread... mediocrity incarnates with a proclivity for lazy victimized ignorance in the face of the market and it's tools. thank god they're the majority.

 

[Big Outside Bar]

Quote from S2007S:

This is why they are printing money and not taking any losses, they are front running, its guaranteed free fucking money no matter what.

Of course they take losses. No losing days does not equal no losing trades. Explain to me how, now flash orders are out the picture, they are front running?

Anyone, yes even you, can rent a server these days in a data center within 500m of any major exchange for no more than a few hundred dollars a month. It's not colo but it's close enough. The power available at your fingertips is truly staggering. Any decent server has the processing power required to do realtime analysis of 1000s of market data messages per second. There's nothing stopping anyone turning around orders in under 50ms.

Either keep up with the game or shut the fuck up and go play in the corner with the other children.

I fucking hate whiners.

 

[MoreYummy]

Wondering who is this new user, a top trader just found ET.

 

[Elitist Trader]

There is no one FORCING YOU to risk your money in the market.

If you lose money, its YOUR fault, not the fault of big bad, evil, HF traders.

You made the decision to enter a trade based on your analysis of where the market might go in the future, if you dont make money, then YOUR ANALYSIS WAS WRONG!!!

Anyone that doesn't understand that, GTFO this website and go back to yahoo finance.

 

[trade2live]

Ok so does anyone have an idea of the returns these firms make ? Do they manage OP money ? No losing day in years doens't mean they make huge returns. I know of some systematic (probably HFT) FX programs that have very few losing months, their risk adjusted returns are great but it's not like they make 50 or 100% per year every year.

 

[achilles28]

Quote from Big Outside Bar:

You simple minded fucking cretinous cock jockey. Of course they take losses. No losing days does not equal no losing trades. Explain to me how, now flash orders are out the picture, they are front running?

Anyone, yes even you, can rent a server these days in a data center within 500m of any major exchange for no more than a few hundred dollars a month. It's not colo but it's close enough. The power available at your fingertips is truly staggering. Any decent server has the processing power required to do realtime analysis of 1000s of market data messages per second. There's nothing stopping anyone turning around orders in under 50ms.

Either keep up with the game or shut the fuck up and go play in the corner with the other children.

I fucking hate whiners.

High frequency traders jump the order queue using ISO orders only available to market-makers.

They literally front-run orders that were placed *before* theirs, at the same price, due to a regulatory loophole.

That's why these investment banks/bd's kill it, everyday, with no losers.

This isn't "trading". It's front-running. No different than an institutional broker in the pits that signals large size to an accomplice *before* he puts the trade on. Except now front-running is computerized. Which is why the old floor guys can't make a buck.!

That's just one example I'm aware of. Perhaps others could post more.

I got that from a comment submitted by Tradeworx to the SEC on High Frequency Trading. pg 17.
http://sec.gov/comments/s7-02-10/s70210-129.pdf

 

[Big Outside Bar]

Quote from trade2live:

Ok so does anyone have an idea of the returns these firms make ? Do they manage OP money ? No losing day in years doens't mean they make huge returns. I know of some systematic (probably HFT) FX programs that have very few losing months, their risk adjusted returns are great but it's not like they make 50 or 100% per year every year.

That's a bit like asking 'how long is a piece of string?' It varies enormously depending on the firm. Most of them are privately owned so the exact figures aren't generally known. Getco and Citadel are each rumoured to pull in $500m+ p.a. though.

Tradeworx have got a good doc on their site we sometimes point the Muppets in the press towards...

http://www.tradeworx.com/TWX-SEC-2010.pdf