I was trading some biotech I bought at $41 and before I could put my order to sell it at $42.60 it hit $42.89 and fell back to $42 where I dumped it. The same thing happened with Puts on LULU yesterday stock is trading at $53.00 when I get ready to sell my puts at $2.00 (I paid $.88 and they hit $2.10) and Poof! LULU is back to $54.60 and falls back down to $52.90 where I finally dumped my puts. The puts went from $2.00 to $.60 back to $2.10. How's that for fast trading, most of this trading does not make sense, you can see Apple's Buyback in action today, that's trading that makes sense. A trader can position themselves to profit from Apple's great move. I churned over 5000 of Apple's $113 and $114 Calls, back and forth so low commission is needed besides a great execution. If I got rebates on these, most were providing liquidity and on some I got screwed because the Market Maker never posted my order! I posted 400 contracts at $.30, 90 get filled and I never see anything on the level two. I posted this order before the stock hit $.27 so what do you think happened? Can you make sense of the HFTS gang? If your brokerage sucks your in trouble, one thing a trader must do is have orders placed in case the stock moves like the biotech I bought or you lose your only chance on these crazy stocks, what say you?
You need to get out of your head that these HFT firms are trying to compete with you. These computers aren't trading on the same time frame as humans. They are using extremely powerful processors and are capable of analyzing market data down to extremely small time frames, like microseconds. They also are not interested in your money, because to put it bluntly, you simply don't have enough. They are competing with each other. These are institutions with deep pockets and armies of the most intelligent people in the world writing the algorithms you needlessly fear, and they and are going head-to-head against other big firms. Your money is useless to them. What you are describing happens every day in all markets, and is not something to be alarmed about. Those gaps/fast movements didn't happen because of the HFT firms - they likely happened because of buyer/seller imbalance. You are blaming HFT for these moves without any evidence.
Lets face this: you CANNOT compete with HFTs in speed; they are faster than you! ...however, they are not as smart as you and so theres your edge. Smart trading is the way to go against HFTs. HFTs are pretty dumb; it is not possible to incorporate compute intensive AI into a system that is supposed to respond within 100us. >> I was trading some biotech I bought at $41 and before I could put my order to sell it at $42.60 it hit $42.89 and fell back to $42 where I dumped it. thats good... you are on the right side of the trade... you are trading with HFTs... your intuition is correct and so why not convert the sell into a limit sell order that you could have go 42.60... my 2 cents...
This underlying point of this thread is as false as saying intraday traders are competing with long term investors.
If you notice your bid is pushing the price up (or ask is pushing it down), you have two choices: enter an order that crosses the market or use market orders. You might try the new ECN which delays broadcast of bids and asks. --Also, if the market is really that fragile, you could play market maker and enter on both sides of the spread.
HFT can move the ES futures 20 points or more in < 1 minute on news, tell me how that has no relevance to day traders.
Why can't they move it the same on non-news? After all if there is advantage to moving the market, why not just keep moving it all the time??? The answer to the OP is that if you don't try to execute trades in 0.01 second, you are not competing with HFTs. Just swingtrade and you will be fine....