New book on how traders are beating the HFT guys

Daal said:
-Market making style scalping, buying the bid and selling the offer. The HFTs have monopolized the spread for the most part and this strategy doesn't work for human traders anymore
-News repricing. By the time you look at the news and check the chart you frequently will see a huge bar in one direction or another. The easy part of the move is now captured by the HFTs for the most part. You can bet on continuation or reversal but its a harder strategy with a worse sharpe ratio
-Share-class/ADR arbitrage, they took over that too.
-Repricing stocks when a big buyer/seller is detected. HFTs extract extra $ from these big players, in the past a lot of that $ went to day traders. It is still profitable but not as used to be because they are good at that
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What I want to know is why small cap stocks which used to do their own thing now have such high correlation to the general market. Is this HFT too?
 
Grandluxe said:
What I want to know is why small cap stocks which used to do their own thing now have such high correlation to the general market. Is this HFT too?
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I suspect this has more to do with this Fed induced equity boom and the hedge funds that participate on it rather HFTs but I don't have a strong view on that
 
austinp said:
I've been trading Russell 2000 emini futures since 2004 and crude oil futures since 2010. Anyone who has traded either / both markets can assure you without question that HFTs have rendered them mere shells of what they once were.
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So let me get this straight, the Russell 2000 and crude oil have both DOUBLED in price since you started trading them and you couldn't (or cannot) make money because of these... "no-good" high frequency traders?

You must be joking, right? I mean this is serious Seinfield material, Austinp.

austinp said:
True liquidity, as in click a 10-lot or 20-lot and get filled on all with nil slippage was once a given but now an impossibility more than not. The way Russell futures blow thru 30 - 40 tick sideways whip moves inside of a 50-tick total range is at blinding rates of speed.
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You want to make money or you want to get filled? :confused:

If , for whatever reason it does not matter, your trading activities are not profitable anymore, change your trading style or your time frame, period! Don't just stay there dreaming about the good old time, do something about it and simply adapt, like Grandluxe rightly said.

I used to successfully day-trade the S&P 500 with tight stops, back in the 80's. Then it became more volatile and my stops were no longer doing their job, so I started using dynamic, volatility-based stops instead and the problem was fixed overnight.

Adapt or die, that's the reality of trading.

austinp said:
As for HFTs changing ALL markets' landscape dramatically, there is no question about it. Not even possible to disagree or debate.
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Oh please.
 
brad10 said:
There is a new book out about how current day traders are beating HFT. It is titled “Traders of the New Era: Interviews with a Select Group of Day and Swing Traders Who are Still Beating the Markets in the Era of High Frequency Trading and Flash Crashes”

http://www.amazon.com/Traders-New-Era-Interviews-Frequency/dp/8591671309/ref=tmm_pap_title_0

It is very appropriate with all the talk about how HFT is ruining trading. I just got done reading it and found it very informative. All the traders interviewed are long time traders that have adapted to the new world of HFT. For me, the highlight is Eric Scott Hunsader who discusses how the new HFT structure affects everyday traders. I have already made a few changes in my trading based on it.

It is a quick read and similar to Market Wizards, except the author interviews veteran day traders, not hedge fund manager.

My only complaint is that it could have been edited a little better.
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Thanks Brad..looks like an interesting book, one question in reading the intro it doesn't say how he came about these traders or vetted them. Does he say elsewhere ? I'm just curious to know if he actually saw results or just related stories. thanks
 
Grandluxe said:
What I want to know is why small cap stocks which used to do their own thing now have such high correlation to the general market. Is this HFT too?
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I don't think so. Correlation is on a much longer time frame that HFT's trade. I suspect this has more to do with the relative volume increase of ETFs in the markets. I do think that the lower average VIX is a function of increasing HFT transactions however.
 
austinp said:
and what would motivate anyone to write such a pointless book which nobody would buy to read?

I've been trading Russell 2000 emini futures since 2004 and crude oil futures since 2010. Anyone who has traded either / both markets can assure you without question that HFTs have rendered them mere shells of what they once were.

...........
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The rather odd comments on this website about HFT not affecting trading, have lead me to believe that MOST people who comment on ET are not experienced traders. It is not that they disagree - I don't mind that at all, it's that theircomments show an ignorance that is hard to explain. Maybe it is me?

Adapt or die and to adapt one has to know one's enemy first.
 
drownpruf said:
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I wonder how many people will understand how superb this reply really is?
 
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