Right, so you are stating that HFTs work in liquid books. Whoopy-dee-doo. Liquidity and depth of market has vanished since HFTs came along (comparatively). I've been trading for 20+ years and I've adjusted to the HFT world, but don't make out HFTs as a god-send (because they aren't).
Insider trading hurts only HFT
- Thread starter wannabetrader
- Start date
Right, so you are stating that HFTs work in liquid books. Whoopy-dee-doo. Liquidity and depth of market has vanished since HFTs came along (comparatively). I've been trading for 20+ years and I've adjusted to the HFT world, but don't make out HFTs as a god-send (because they aren't).
If you can explain to me how a typical HFT "front runs" others orders, then I'm glad to listen. However, I doubt your reply will sufficiently address the mechanics of today's markets.
Slide not hide orders on some ECNS? Latency arb between fragmented markets? Allowing HFT MMs into darkpools? Purchasing low latency data feeds from the exchange which allows them to see the market milliseconds before retail traders? Just taking a guess.
https://dealbook.nytimes.com/2014/0...-to-accuse-barclays-of-fraud-over-dark-pools/
Exactly. When you create orders and tell different participants different stories about those, then make them available only for a select few - that is front running because it's only done so for the benefit of the select few. Pretty sure that's just the tip of the iceberg, the really nasty stuff probably will never come out.
I'd add the ability for them to price at fractions of a cent while retail traders can't, so they can go to the head of the order queue by putting in an order that is $.001 better than the NBBO.
Last edited:
take another guess
I'll defer to your expertise. Please enlighten us. No sarcasm or snark intended.
Slide not hide orders pose about a 0% chance of hindering your strategy unless you trade HFT. Given your post, you don't. They do in fact make Mr. Bodek lose money. He was a HFT, his job was to worry about these things.
Latency arb, as terrifying as it sounds, is simply keeping two markets in sync. Read about Reg NMS. Arbitrage is an essential operation in efficient markets. It ensures price consensus across exchanges. The "free money" (after 50k/month data fees etc plus 100s of Ks a year for devs and traders) that latency arb people make is for their service of transferring this information.
Now if youre retail, presumably you're not entering orders algorithmically. Moreover, it takes most people about 300 millis to blink (maybe less if you're a good blinker). So what will retail do with these wonderful super fast feeds? Nothing. Also, more like micros, single digit even. And hypothetically, if retail needs a HF feed, because they are really good at blinking, they can buy one.
Now, I understand people need something to complain about. And naturally, complaining about banks selling toxic tranches of CDSs or even better, jacking fees up on retail bank accounts would be ridiculous. But maybe it's time we start complaining about things in proportion to how they affect you. That's an opinion by the way, to each their own.
As a side note, the people doing HFT would be good at trading whether or not HFT was allowed. A HF feed, colocation, etc is useless in incapable hands. So are armies its skilled analysts at macro hedge funds. There's an intelligence assymetry in profession trading, just like there's a talent athleticism assymetry in pro sports. That's why they're professionals.
What this means for retail? Understand the markets accurately. Seek the best commission structures. Find alphas at a timescale that you can execute on. Treat trading like a business. Have realistic expectations. If you seek better tools and more capital, look to professional trading.