Ya got that backwards. Despite the cry baby rants, HFT like a lot that have changed on Wall Street from the days of the brokers owning the yachts, will become more open and innovative to all kinds of new ways to trade the markets.
its simple, like many of the posters here. if any one group is making too much money , they are cheating. period.
I am a simple man, stock777. Let us take a real-life example. Imagine that I observe an often tick-by-tick correlation between AUD/JPY and the SPX. I know that the SPX index is updated every 15 seconds, and so I look at /ES and see that the correlation is even stronger there. Furthermore, I now have two instruments which are directly tradable. I write a program that processes live data for these on a tick basis, and can identify when they are tightly correlated. This is usually when the US equity markets are open, but there are certain times when these two intruments are particularly tightly correlated, and my program can identify when the markets are in this "mode". When they are, and my code sees big moves in one instrument which are not automatically reflected in the other, my program enters a long/short position designed to capitalize on the arbitrage opportunity. Due to the fact that I dampen signals over time, an opportunity such as this would not cause my program to think that the pairs had become uncorrelated, but 1) a string of losses or 2) an increasing number of uncorrelated moves would. This would happen naturally at the whim of the markets, and generally at the close of the trading day (and inversely at its open). Let us posit that I interface my program with Interactive Brokers or Lightspeed, and fund my account out of my own hard-earned money. I am now making futures and foreign exchange trades as fast as the markets will provide me with opportunities. In some instances, I am trading with a high frequency. As my account size grows, I will take larger positions. Is there anything wrong here? Am I cheating? Should there be regulations against what I'm doing? If I make a lot of money doing this, am I making too much money?
The answer is no. That kind of obvious edge is unlikely to persist for long as everyone can see it and it will be arbed away. The kind of edge I am referring to is crap (a technical term) like co location, and jumping ahead by .0001 cent
Seems like your gripe is against order flow and front running - which has been explained to you in this thread. Why don't you take a minute and re-read the last few pages before you continue to contradict yourself.