The liquidity is there if you trade small. Those who trade size have to break up their orders in order to try to minimize their impact on the market. But they know that thanks to HFTs and their front running algos, HFTs will fill only a small fraction of their orders at the price that they want and then front run them until all their orders are filled, at much worse prices. It's either get a small fraction of the trade done at a decent price or the whole trade done at bad prices thanks to HFT predatory front running, and lack of human market makers who have been destroyed by the HFTs. There is a lot of fake liquidity in this market, the flash crash in 2010 and the sudden plunge and rebound on August 24 attest to this. For most people on ET, HFTs probably don't matter. The HFTs are really the parasites of hedge funds, daytraders who trade size, and actively trading mutual funds.
The HFT liquidity is there only if it's profitable for the HFT to provide the liquidity, when is not profitable, there's no liquidity. HFT's don't have "affirmative obligation" like traditional market makers which requires them to quote two-sided markets at all times, even when they rather not. This HFT-liquidity-when-convenient played a roll in the flash crashes of 2013 and 2010 when HFT's cancelled their bids and reversed their positions to sell, but there was no one to buy. http://www.nanex.net/aqck2/4150.html
But now we seem to be moving on to a different discussion and deviating from the the first claim which was how HFTs and algorithmic trading has CHANGED intraday patterns and how they're now more random and irrational than in some distant past, thus harder to predict. Liquidity wasn't even mentioned in the original post, nor on the first page of the discussion. Now, the problem seems to be that HFTs provide fake liquidity, but then it's said that this is not a problem for most on ET, but for the larger institutions (who do in fact employ HFT themselves may I add). So, which is it?
By the way, I'm pretty sure the blame game is old news and that it was played prior to the HFT-era as well. Back then it was the locals who f**cked you up the ass or the specialist. Or if not them, it was the Government or the FED with direct market interventions or what have you.
In the same article it says: Of all the HFT orders at NYSE upto 90% gets cancelled. Such mass order cancellations distort the market prices and irritate the other market participants. It also says that TD Ameritrade is selling its trade data (ie. that of their clients) to other firms, mainly to Citadel, for millions of $ per year. (ie. a kind of broker trading against own clients...)
It's the same discussion, intraday patterns and trading in general has changed because the behavior of liquidity has changed. And this it's a problem for all traders and investors, small traders might not see it (fractions of a penny per share), but that doesn't mean they're not getting ripped off.
I don't yet see any proof of this in this thread. Is it possible to see comparisons of intraday charts today and pre-HFT or some other metric to support this claim? If not, this all seems very speculative to me. I have no difficulty in believing it to be the case though, but I've learned not to accept things just because someone says so. I'd like to see the data. In some other thread we were discussing volatility. I admitted to not having an up to date database, but that I suspected the volatility in the time period I mentioned were above the norm for the last 2-3 years. Some other user said I was wrong. Then another user, @wrbtrader, came to my rescue so to speak and could indeed verify that I was right, backing it with data from his own personal database: In fact, perhaps @wrbtrader has some insight on this subject as well?
Have you actually tried that? If you had then you'd know it's close to impossible. Try joining the bid and see if you get filled if the price doesn't trade through it (but there are plenty of fills at your level). If it was like you said, it wouldn't be a problem at all. But in practice it's almost never like that.
The HFT abuses have been well documented and abound in the blogosphere. Try the Nanex twitter feed or the homepage and you will have 25+ pages of documented evidence of what is going on...
HFT takes money from all participants, no matter their size. The more active you are, the more you pay.