Some data: http://www.cxoadvisory.com/technical-trading/how-much-can-high-frequency-traders-really-make/ Key finding: # The upper bound of profit available to aggressive high-frequency trading with a 10-second holding period for a set of 6,279 U.S. stocks during 2008 is about $21 billion. Available profit declines sharply with holding period to just $21 million at 10 milliseconds (see the chart below). # Across all holding periods, this upper profit bound corresponds to less than 0.05% of U.S. equities trading volume. So, again, all of this noise over 0.05% of U.S. equities trading volume seems pretty excessive.
I suggest reading "Trading for a living." It's actually being featured now at the bottom of the ET page. It pretty much sums up the FACT that we are ALL losers (no matter how much we win) when it comes to the exchanges, regulators, slippage, etc., Yes, we either win, and still lose to a degree, or lose, and REALLY lose... This book is written in 2001, BEFORE the HFT's took over the landscape...:eek: And no, I'm not the Author, nor do we work together. "Gordon Gekko" said greed is good in the original Wall Street movie. In the not very good part two movie, lol, he said, "looks like greed is now legal..." I have to agree. despite not loving this movie like the original.) So, you've got the $, the liberal NYSE has your time...
Fully agree with your post. 1. I think HFTs have a legal competitive advantage because of speed (and they obviously have to pay quite a bit of money for that) 2. I don't think they make or brake a trader's success if the trader has a successful strategy. 3. I am fully convinced some are front running orders. I experience that every single day. It's more annoying than a real problem and it can go both ways.
"Fast Traders, in Spotlight, Battle Rules" http://www.nytimes.com/2011/07/18/b...-attack-defend-work.html?pagewanted=2&_r=1&hp
What is the point of calling HFT traders "cheetahs"? Is it just to say these algos have no knowledge of their markets and trade like monkeys?Is it all that Chilton came up with? I may not get the subtleties here... Whatever this guy is a regulator for futures market, where HFT has never caused any problem and never acounted for more than 40% of the market. HFT have no way to game the queue, to front-run or to manipulate on futures. This guy is an idiot.
Good read on the potential risks regulators are look at from the Bank of Canada (page 47) http://www.bankofcanada.ca/wp-content/uploads/2011/06/fsr_0611.pdf