How do HFT strategies combat slippage

[schizo]

That's a load of bullshit. What you describe existed for a brief period on NASDAQ Level II. It was never an edge in trading NYSE and AMEX stocks precisely because you had to send your order to the specialist.

Dude, I think you're full of shit. It was the SOES bandits that essentially brought the birth of ECNs. I think you're talking about SelectNET.

 

[savoir]

Dude, I think you're full of shit. It was the SOES bandits that essentially brought the birth of ECNs. I think you're talking about SelectNET.

What do you know about the SOES bandits? BTW, by the time Houtkin wrote his book, that game was long over. He was on his boat counting his money.

It is obvious to me you know shit about direct access trading at that time. Noone with some knowledge would conflate a specialist with market makers. I understand your wanting to chirp in to support someone you like but stick to the facts. Either Volpre is outright making shit up or he is fucking delusional.

No point arguing, so if you can't accept that, all I can say is go fuck yourself.

Back then, the specialists had no better technology than us dumb money. But the balance is completely tipped in favor of Wall Street now. You can't scalp like you can back in the 90s. It just won't work. What you need is an edge, a niche of your own.

You are conflating the specialist with a market maker. The specialist was given a monopoly by the exchange to make a market in a stock.

 

[volpri]

That's a load of bullshit. What you describe existed for a brief period on NASDAQ Level II. It was never an edge in trading NYSE and AMEX stocks precisely because you had to send your order to the specialist.

If what you describe was fact, firms like Bright Trading that traded only specialist markets at the time would have been all over that strategy. I can still remember Bob getting irritated over the phone when I asked why his firm didn't offer trading in NASDAQ stocks. He said there was no edge because there was no specialist. He had just tried to sell me on their "trading with the specialist" opening orders strategy. I decided to go with Momentum. Fortunately it was not the Atlanta office. Not many will get the meaning of that reference. I had a laugh about a year or two later when I saw that BT began offering NASDAQ stocks.

Not to rag on the Bright brothers too much, but Don Bright used to come on here and say you couldn't make money trading index futures because futures led stocks and there was nothing that led futures. He challenged anyone to show up in their Las Vegas office to trade in front of him and prove him wrong.

Right before the pandemic, a buddy of mine who moonlights as a backgammon hustler got into an argument at a gathering about trading. The guy he was arguing with, who said he was a former prop trader, must have traded with BT because he said the same thing about index futures--they lead stocks but nothing leads futures so it's impossible to get an edge. He wanted to come over to my house and watch me trade so I could prove him wrong.

Rest in peace, Don.

Sorry but you don't know what the hell you are talking about. It was ONLY an edge in NYSE and AMEX because they had specialists not market makers. I traded many many times like I explained in my previous post. It worked when the specialist would open the spread. It did not and could not exist in the NAZ. Sorry Don didn't know about it. LOL

If you wish to learn more about the technique get up off your royal behind, order the books below and read them (even though it won't work today):

1) daytrade online christopher farrell

followed by his sequel:

2) The Day Trader's Survival Guide:... by Farrell, Christopher A (amazon.com)

• The U.S. Securities and Exchange Commission, the federal agency that oversees the nation's stock markets, ordered all U.S. stock markets (see below) to convert to decimals by April 9, 2001. The decimal system brings several benefits to the small investor, according to NYSE chairman and CEO Richard A. Grasso.

Prior to that date the techniques worked great. I traded them many times. Often times over and over in the same stock during the day session. All one had to do was scan stocks that the specialists open up the spread and jump in with limit orders. Yes the specialist got mad because the spread was his bread and butter. He would do it a while on a stock then stop. But that was his problem for opening the spread. It was a lucrative way to dayTrade back in the day of fractions. Going to decimals DID not help the dayTrader who was using the techniques.

Look just because you or Don didn't know about it doesn't mean it was bullshit! LOL

 

[volpri]

You are conflating the specialist with a market maker. The specialist was given a monopoly by the exchange to make a market in a stock.

And that is exactly why he would open the spread. And why it would NOT work in the NAZ that had MMs.