HFT computers have almost depleted the independent human day traders. This has setup the match they wanted all along. A continual shakedown of the Federal Reserve, whereby the Fed recognizing it can never let the market go down again in a large amount, they will threaten a flash crash to permanently cripple the investment public's mental state if they don't get a Fed computer to take up slack in algorithm infinite loops. If the algorithms don't sense a profit exists, A.K.A. "slow human traders", then they will vacate the role of creating activity to show life and stop or deadlock in an infinite loop creating a flash crash. The Fed is happy to give money to the HFT shakers because they perform a vital function of creating a scene. Showing life, making numbers flip around, and most importantly -try and get an innocent real world life to enter the slaughterhouse and capture real investment dollars. The more money the Fed feeds an HFT computer owned by a bank with access to Fed borrowing privileges, the less need to make that transfer an interest baring loan from the Fed to the bank. The money is free, fed through HFT trading to banks, no longer needing to take money in the form of a loan, not that much interest is take on it right now anyway.
+1 on other hand ...today i was watching one stock with spread 10%...yes..10% between bid and ask..30+ k average volume.where is hft? where ae all those liquidity providers? fair and orderly market? wake up...this whole stock market thing is an illusion..
HFT takes advantage of people's poor comprehension of what is going on in very short periods of time to steal.
There are aberrations inside still. We have to expect that 30k is phoney and a losing attempt to attract a casino player. Every casino has a slot machine that is dusty, in the corner and doesn't get played by clientele.
Your flaw is that most HFT guys aren't backed by people that have access to the Fed Window (they are usually no-name guys trying to stay that way). Sure Goldman and JPM own matching engines and maintain those algorithms - so does Knight & GETCO - but there is a massive regulatory difference between making a market and trading (equities). Most HFT shops are independent and dislike the fact that they have to clear GS&CO/GSEC, JPM, CSFB, Wedbush, etc. I disagree with this and take an opposing position simply because I think you lack the industry experience to know better. There are qualifications that can be met whereas a firm can be self-clearing AND have UNLIMITED intra-day buying power. Since most HFT firms don't operate overnight or 24/7 why would the Fed Window even come into play?
I agree with what you said. There are two separate issues going on and I didn't segregate them. Just independent HFT and banks that have HFT trading operations. The conclusion remains. A super computer will beat a human chess player every time. The human will take some of the computer's board pieces, but the computer will win the match and after that, you're done. Who is left to play the super computer? Only the Fed.