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

Quote from trade2live:

The very fact HFT firms have to come out here and elsewhere to try to explain that what they do is legit contradicts their defense. And the very fact thât they have lobbyists and friends in the right places by their own admittance is disgusting. Real legit tradersdon't need PR firms !!
I am sorry but did you ever hear a hedge fund manager defend his strategy and way of making money ? They don't have to except on a case by case basis, because they make money by making bets like everyone else. HFT firms don't bet , they exploit loopholes and the technical inferiority of other participants . In fact looking at those HFT people, they are not traders, they are just programmers, they are not unlike hackers, they find vulnerabilities and they exploit them.
First off all, there would probably not be any discussion of transaction tax without these HFT firms, they are part of what ruined the market by exacerbating volatility and so the transaction tax now appears to some as a viable fix to this higher volatility. Everyone is going to be impacted by this, and it's all the fault of HFT .
Secondly none of HFT people have addressed what I said in my previous post, besides the fact that someone mentioned they base their trading on the work of one or two mathematicians, so they use similar models, just like I suspected.
Prove that this does not exacerbate volatility and herd behavior !
I predict HFT will be found to be a chief factor in the extend of the next great crash that is coming. If all these firms trade using similar strategies, one day there will be a HFT black swan, and they will take down the markets with them , 1987 style. This is close to a certainty as far as I am concerned.
Thirdly I you use any information before it's published for everyone to see, your business is not legit , and regulators need to address that issue NOW and in a way that does not impact regular participants to the market.
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Having friends is a bad thing? Having friends is not a bad thing, using them for covering bad deals is.

All successful firms have PR representatives. It's called business insurance.

I've heard many many hedge fund managers as of late defend their strategies of making money.

Trading or investing is only considered "betting" if you are unsure of the market price direction and strength.

HFT firms only do what pit traders have done from the inception of the market. the only difference is that HFT firms do it using computers. It's OK for a pit trader to throw orders ahead of the flow but God forbid a HFT firm do it, right. computers ought to be banned altogether right?

You can't ask someone to prove a negative . . . think about it. HFT trading simple pushes the market in the direction it was already headed . . . faster. This does exacerbate volatility. If you can stand the volatility . . . get out of the market. This is 2010 not 1957. The herd behavior is grounded in funds not individuals. Sell areas and buy areas are established on all retracements. When these sell areas are hit, funds cover to save profits. When buy areas are hit, funds come running in to snatch up deals. This is why the market recovered so much on May 6th.

HFT Black Swan? Turn on your TV or pick up a newspaper. The world is in economic turmoil. The world currencies as a whole, especially the Euro are dumping, oil has had a major drop, Gold is at a short term top, there are riots in the streets, incumbents are getting the boot and the HFT's are going to create an economic Black Swan? That is like saying a blindfolded man should be surprised if he is hit by a car walking around 20 lanes of rush hour traffic at night wearing black.

Using information before it is published . . . you be sure to tell all the pit traders they are not a legitimate part of the market process.
 
Quote from zdreg:

"Thirdly I you use any information before it's published for everyone to see, your business is not legit , and regulators need to address that issue NOW and in a way that does not impact regular participants to the market." from trade to live poster

there will always be people who have an edge over you. if i am at analyst meeting and i figure out the ceo is lying do u think i am going to tell you?
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That analogy isn't correct.

In the above scenario, you're making a subjective opinion that may, or may not, be true. If the CEO had pulled you aside after the meeting and confirmed he was in fact lying, that's insider information, and illegal to trade on.

Much of the high frequency trading being done is not a subjective directional "guess". Hard orders are placed (facts about trade decisions already made), and HFT'ers are able to jump ahead of those trades via ISO orders. And, perhaps, via their data feeds.

That's front-running based on non-public information, which is the definition of insider trading.
 
ProfLogic, it's obvious you are on the defensive and adopting the truth spinning tactics of your friends. More hedge funds look at PR firms because they have come under scrutiny since the financial crisis. HFT is part of the questionable practices that have caused this increased scrutiny in the first place. So you and the CDS/CDO traders are essentially drawing unnecessary attention to the whole alternative investing sector including all the people who compete on a level playing field .


Anyway if this thread is any indication HFT people are another arrogant bunch in the markets headed for their own wake up call . No matter what you do and how sophisticated you are the markets can eat you alive. I suspect a lot of these HFTraders know nothing about markets and think they found a holy grail, their arrogance will be their undoing.
 
Quote from ProfLogic:


HFT firms only do what pit traders have done from the inception of the market. the only difference is that HFT firms do it using computers. It's OK for a pit trader to throw orders ahead of the flow but God forbid a HFT firm do it, right. computers ought to be banned altogether right?

Using information before it is published . . . you be sure to tell all the pit traders they are not a legitimate part of the market process.
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When a pit trader speculates another floor trader holds size and trades ahead based on a guess, that's legal.

When a pit trader obtains information that a large trade decision was already made, and trades in front of it, that's insider trading. And illegal.

Are HFT'ers just taking guesses? Or do they already know beforehand what trade decisions were already made, and step infront of those trades via regulatory loopholes?

Do two wrongs make a right? The pit traders did it? So now it's okay for the HFT'ers to do it? You must be making some big money to justify this, prof.
 
Quote from syswizard:

See this.
http://www.elitetrader.com/vb/showthread.php?threadid=127957
I would be amazed to see a study that imperatively shows and proves there is a distinct advantage for ISO orders as it applies to HFT.
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Tradeworx is a major HFT operator who issued a comment to the SEC.

On page 17, they noted ISO orders enable HFT'ers to violate the time-price priority sequence of the order book (jump the queue) and front-run orders.

In their own words, Tradeworx said the practice is "widespread".

And why wouldn't it be? It's legal, afterall.

http://sec.gov/comments/s7-02-10/s70210-129.pdf
 
Quote from trade2live:

ProfLogic, it's obvious you are on the defensive and adopting the truth spinning tactics of your friends. More hedge funds look at PR firms because they have come under scrutiny since the financial crisis. HFT is part of the questionable practices that have caused this increased scrutiny in the first place. So you and the CDS/CDO traders are essentially drawing unnecessary attention to the whole alternative investing sector including all the people who compete on a level playing field .
Anyway if this thread is any indication HFT people are another arrogant bunch in the markets headed for their own wake up call . No matter what you do and how sophisticated you are the markets can eat you alive. I suspect a lot of these HFTraders know nothing about markets and think they found a holy grail, their arrogance will be their undoing.
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I'm a technology advocate but like anything new I am an advocate of responsible use.

I am a LFT (Low Frequency Trader). I would consider my self a naturalist, a pure cyclic trader that uses technology to enhance my profit making ability. I fully understand what the HFT's do and it doesn't bother me because I only trade on confirmation. I understand that all a HFT does is a technologically enhanced version of a portion of what a pit trader does. If I cry fowl for that then at some point someone will cry fowl at anyone using computers to trade. Stupid statement? You are condemning HFT traders for exactly a portion of what pit traders do.
 
Quote from achilles28:

When a pit trader speculates another floor trader holds size and trades ahead based on a guess, that's legal.
When a pit trader obtains information that a large trade decision was already made, and trades in front of it, that's insider trading. And illegal.
Are HFT'ers just taking guesses? Or do they already know beforehand what trade decisions were already made, and step infront of those trades via regulatory loopholes?
Do two wrongs make a right? The pit traders did it? So now it's okay for the HFT'ers to do it? You must be making some big money to justify this, prof.
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You think a seasoned pit trader "guesses" at the price direction and strength of a particular market move?

A seasoned floor trader learns to commit to memory the last few sequential support and resistance points so as orders come down to him he "knows" with "an extremely high level of certainty" that price will move from the last support toward the last resistance or from the last resistance toward to the last support and because of the strength (sequential level direction - HH's to HH's or LL's to LL's) they know whether to get in front of the trade direction or stand aside. This isn't illegal, all of this information is stored in his head and the better the floor trader the better he can make money from this process.

I make a great living trading but what I do is in no way related to HFT's or flash trading.
 
Quote from propseeker:
i'll give you a hint, they make money everyday by a mathematical theorem HFT firms are VERY familiar with and every trader should be familiar with which was postulated by Gerolamo Cardano and proven by Jacob Bernoulli. if you actually take the time to google who they were and how their theorem translates into making money consistently, then you'll actually learn something about trading vs wasting your time as victimized bitches pointing fingers on the propaganda bandwagon. really, it's time to get off that ride, it will get you nowhere. [/B]
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Very interesting imo, however some might say dibatable.

In case you know their probability algos (formulars) let us know
:)
 
Quote from achilles28:

That analogy isn't correct.

In the above scenario, you're making a subjective opinion that may, or may not, be true. If the CEO had pulled you aside after the meeting and confirmed he was in fact lying, that's insider information, and illegal to trade on.

Much of the high frequency trading being done is not a subjective directional "guess". Hard orders are placed (facts about trade decisions already made), and HFT'ers are able to jump ahead of those trades via ISO orders. And, perhaps, via their data feeds.

That's front-running based on non-public information, which is the definition of insider trading.
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Fyi hedge funds hire former cia interrogators expressedly for that purpose. I wasn't making analogy but understand how u could interpret it that way.
 
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