I used to write co located news arb systems as well as market making systems based on stat arb principles. Those 'visuals' you posted at the start of the thread, a few of those looked pretty similar to the type of artifacts my MM system would make in volume and price as it would test the market. Since you seem to be a self proclaimed expert on the subject, I can only assume you have experience in the field as well?
candletrader, computers are tools used by humans to increase efficiency. their primary utility is calculation and automation. computer useage in the markets is no different. the reason you were able to trade profitably in the timeframes you posted, was because the inefficiencies at those timeframes were still large enough. this, by far and large, is no longer the case. why? because with the advent of computers as tools in the marketplace and their utilization in ever increasing automation, they have rendered the need for manual traders to clear the market of value/time based inefficiencies unnecessary. simply, computers can do it faster and better. the only thing hft's are actually doing, is making the market incredibly efficient. so, by definition, you yourself will need to increase your own efficiency and increase your own competitiveness or you'll soon find yourself out of business. the only two suggestions i can give in this vein, is to either move to higher timeframes and see if your edge is still applicable, or start learning how to use more modern tools. ie, instead of pointing fingers at goliath, cursing him for killing friends and family, trying to fight him with your fists.... i'd recommend working on that sling.
HFT and algorithmic traders are little threat or competition for the discretionary trader. If anything they may add liquidity and are a far better counter party than your broker. For those complaining about front running... Just look at your broker agreements... Many of you agree to allow your broker to be counter party to your trades. #1. They provide your data feed. #2. Orders go through their execution platform #3. They have full knowledge of your entire account & trading history. #4. For non exchange supported order types/ ie trailing stops. they manage these trades. #5. They provide margin and manage your credit line. #6. You have authorized them to selectively trade against you and pay them commissions for the opportunity to be your competitor. #7. They can reject orders and freeze your account at will. This isn't a rant against brokers... Just realize who all is seeing your cards at the poker table.
cutting through the bs and the apologists. this whole business of co location is at the heart of the scam. basically, they have sold the right to see and react to EVERY order before 99.9% of the public. anyone who does not have a problem with that is either a fool or a co-conspirator. yes, it is similar to what the commodes had with floor traders, but never has this been so blatant with stocks. and its not enough that they can see it first, they are also fishing around for the size so they can maximize the edge.
a couple more flash crashes with no bids as far as the eye can see will shake out some of the weaker hfts for sure.
I think half of the people on this thread either misuse or don't understand what is front running. If you send an order to buy a stock, I somehow learned about the order before it got executed and I executed my order before you - this is front running. If you send an order to buy an stock, the order got executed and I learned about execution before you - this is not front running.
There will ALWAYS be someone who sees the quotes a little bit faster than you, or a computer that can make trading decisions faster than you. Back in the day, traders in the pit had an advantage over the remote traders. Today, it is the laws of nature and the length of a cord. It is true today, and has always been true - in trading you must choose your battles. There are point-and-click traders who are still killing it in these markets.
+1 And then if you explain this difference, they start getting excited about flash orders, when 90% on this thread don't really know what a flash order is and where it exists.