I think this is a question best answered by a Don Bright. His collective of props, he should know what effect, if any, hft has on the liquidity side of his business.
it wasn't an analogy. 87 is a great reference for pre-algorithmic market crash dynamics within recent memory. the dynamics don't change regardless of mechanics: if you stuff more than the market will bear, you will crash it. period. the recovery speed has little relevance, but since you brought it up... the reason for the swift recovery, was due to time-frame. trillions of dollars were sold AT MARKET in the span of 10 minutes. liquidity was exhausted and things went to zero. due to the speed, and due to the obvious idiocy of doing such a thing, there was MUCH speculation and 'propaganda' that the crash was due to error. all error's in the markets reverse themselves almost immediately. again, if you want to place blame, get out your pitchfork and go on the manhunt for the idiots who dumped so much at market. go after the exchanges for allowing idiots to dump so much with out any controls in place. but don't go after the guys who wouldn't bend over for these retards... they're the only ones who actually acted rationally, sanely.
I honestly don't understand that response. Bright Trading, like most prop firms, is technically in the liquidity providing business too. Now obviously they only want to "provide" that liquidity when they feel they will profit from it. I don't think Don teaches his traders to look for trade setups that will lose money. Therefore it's safe to assume all traders and prop firms behave in this manner. They trade when they think they can profit from it. If they can't, then they don't.
This new "liquidity" claim is flawed. you remember labranche, ven der moolen, fleet? they weren't printing $100mm a day making markets.
OK, I think you and I are talking about two different points. I agree that HFT's are prop traders. No one is saying they are not. What I am saying is all the complaining about them pulling their bids seems to have opened the door for good old Donny boy to start placing his bids. Did he? Did Bob Bright? And if they didn't, why didn't they? Pot meet kettle.
methinks we have another altruistic prop hater in our midst. they seem to be popping up these days for not being in the game. any retail trader can convert to prop, or at minimum, trade within the daytrading rule with 25K equity. if they can't, then they trade at their own peril. the raison d'etre of prop is leverage. it's like driving in LA. if you can't keep up in the passing lane, then get the hell out of my way.