There Is Absolutely NO VALUE To High Frequency Trading
- Thread starter OnClose
- Start date
I'm not complaining about HFT, and in fact, I don't mind its presence. But saying the technology can be acquired by anyone is not quite true -- and I'm not talking about bullshit technology. I'm talking microsecond latency and top of the line networks.
The technology cannot be acquired by anyone. I battle against HFT every single day using lower grade technology, and I can tell you it is a non-stop fight. But, it is extremely difficult to get even close to what they have because:
- You need programmers working on tasks to build decent infrastructure that will need constant refinements
- You need to have cash on hand to finance all the networking and equipment
- You need some volume already. The biggest barrier to success sometimes isn't even the technology, so much as it is fees and cost structure.
Because these three things are all required, it is EXTREMELY DIFFICULT to get into a position where you can make money without working with players who've already effectively "won" and have capital to deploy.
Do these guys harm the retail investor? I'd say no. But can the retail investors just decide to go get a presence in 80 market centers and get all the best feeds from all the major market centers on a whim? Hell no.
But then, I don't go complaining to Washington that I can't compete with Walmart either, so asking for regulation against the HFT advantages just seems ridiculous.
Quote from nazzdack:
1) Mark Cuban, isn't "Cuban". :eek:
2) Angelina Jolie's opinion on the subject wouldn't garner as much "publicity".
Your kidding .... but is he a mark?
Yes there are those who know (not me). I can't read the link but here is a thought for the legislation.
Electrical engineers know that systems can be modeled. The computer printout for an ideal oscillator model contains infinite points. Any physically created system has some kind of resistance that dampens it down. Positive feedback destroys physical systems, while here on earth ( for most of us) the exponential curve crashes as a secondary effect takes over. Here monetary systems fail, people and animals starve, rats die off when food goes in Burma etc.
Would you like being in the real world if when you watching Kaptain Kangeroo in diapers, some manhattan scientist discovered that atomic bombs have a singularity and the world blew up in a positive feedback loop.
So, I would suggest the legislators consider that a resistance of a minimum time sample trading is required for system stability to prevent potential blowups. The simple answer is to model the trading system and select a minimum time for a NBBO. 500 milliseconds, or 1 nanosecond, but some time. The HFT arms race would stop and the potential for catastrophe would also stop.
If you are talking from the point of view of philosophy, then there is almost nothing known.
If you are talking about the future, then nothing is known. What kind of world would it be if every trade I made worked out?
Consider that the biggest protests about improving any system of laws will come from those who have the most to lose - the criminals and their henchmen.