Thank you, at least someone here has experience (btw $150/month for co-lo is pretty sweet... nice job). Asiaprop, next I bet you're going to argue that those who write HFT programs had their DNA modified at birth to make them smarter. Stop looking for excuses and grow up. Until then, a friend of mine in college who is co-located (yet spends more money, monthly, at bars than on co-location fees) and trading in his boxers will continue to beat you.
You cannot be serious. Did you stick your head in the sand during the flash orders debacle? Exchanges offered a service where the HFTs would jump in right before a retail order and continuously front-run. Tin foil paranoia? How about plain ignorance and/or denial on your part? Your bias is extremely heavy.
You are being way to nice. The funny part for me is I know guys that game the HFT`s....and they are not HFT`s themselves. Not everyday in and out. But they pick spots when a pattern emerges.
wow someone took the time to address a lot of points, I appreciate it. But I still beg to differ on a lot of points. The text got too long so i refer directly to your points in the previous post. 1) I never disagreed with that definition in the first part. But this thread is about HFT something a normal retail guy cannot do, thats WHY we have this discussion about unfair markets. Thats why sub min should not be included. 2) Lol, you may have a slight misconception why you get paid a rebate. Its because you stick your head out not because you add liquidity. Adding liquidity is offering a tradable assets in the market. You offer them, turn around and bid the very same shares a second later. Of course do ECNs define what you do as adding liquidity otherwise they would contradict what they say when they lobbied industry regulators to start this stupid game. 3) You contradict your own point 5). Either its cheap to start up to compete or not. Chose one. And again you use a very twisted argument to make your point. My whole argument is that the parties involved only derive a benefit while pulling pennies out of everyone's pocket BECAUSE they play and unfair game (more below what I mean with that). 4) It would all be fine if I could also sub-penny with any of the retail brokers of choice. I cannot and nobody else in retail space. I really think you do not fully comprehend what a transparent market place is and why its so good for the broad majority of price takers as well as price makers. Its because it bestows trust and equal opportunity something everyone wants to return to do more business. 5) Show me one single HFT which started up operations below 100,000 USD. The complete setup. YOu dont make money by renting a server rack, right? 6) Really? So how come I get raped each and every single time I put in a limit order to get into a long-term position. I dont even dare to trade market orders on any < 5billion market cap stocks because a lot of offers get miraculously pulled although they just showed up on the screen. Buddy, I trade for over 10 years institutionally and personally please dont tell me I dont know how to execute orders and what I am seeing on the screens. 7) Look above, the co-located data feed alone costs more than most can afford. Buddy again, this is not just about start up cost, my argument is about unfair practices in this industry. Orders that get pulled should NEVER be allowed. At least not those orders that get pulled because another counterparty took a glimpse at my order right before it hit the market. 8) First of all my simple answer: I serve the benefit of being a risk taker. I am willing to take risk which others in the market want to offload. Secondly, please do not mix up everything. I dont have any issue with high frequency trading in itself. Thus I also dont care about people arbitraging the market. Its not good for me because most arb opportunities are gone. But why not, I could do the same you are absolutely right. BUT I DONT WANT TO HAVE TO INVEST 100K + JUST SO THAT I DONT GET FRONTRUN BY SOME OTHERS WHO THINK THEY ARE PRIVILEGED MARKET PARTICIPANTS. Last time I signed the exchange agreement I was promised orderly markets with all participants seeing the same I see. This has obviously changed. So if such parties cannot regulate themselves then I suppose we need to impose regulations to return to a fair and transparent market. Very simple. 9) Lol, you again twist my argument. My point is that even a limit order wont work because someone else frontruns my bid a 0.1cent cheaper. For arguments sake (I dont trade penny stocks myself) if I bid for a stock priced at 1 dollar I dont want to bid a whole percent lower but if I had the chance I would love to bid 0.1 cents lower to get my stock. At least I want the same opportunities than someone else in the market enjoys. Simple as that. 10) Yes I know you rent 150 dollar servers. YOu get your co-located data feed thrown in by your dad for birthday (worth several thousands alone), and because you are such a whizkid you code up a industry stealth app in over the weekend, something which took Goldman alone several years to develop and many million lines of code. But hey , you seem to be pretty big mouthed I almost believe you ;-) 11) You deny that moving orders around affects every price taker equally. I cannot say more than that but that it shows your ignorance or lack of knowledge 12) Thats what we pay for, as price takers, to trade or not trade. Market makers get paid to stick their head out. You do the opposite: You pay to get an unfair peek at prices that nobody else gets to see. You also pay to front run others. Hmm, I actually dont care how you feel about yourself but I hope that the door will be slammed in your face asap, and I am pretty sure legislation is on the way to have this pathetic loophole closes soon. 13) As mentioned I dont see tighter prices in volatile markets. And spreads were already way tight enough before the first HFT started operating. No need for you guys to be honest. 14) Dude, you know exactly why some ECNs, including BATS were given the heat recently dont BS around pretending you dont know what is going on. You come across as being too smart for that. 15) goes back to my first point. Precisely, HIGH-FREQUENCY, which every professional will attest you does NOT include sub min trading. But you could start introducing the term Ultra High Frequency maybe you make your points clearer, though I doubt it. 16) Yes we have seen what happens in volatile times. Nobody adjusts they reduce liquidity to the point of completely shutting operations. And I talk about spreads in commodity futures, options, index options/futures, stocks, you name it. 17) speaks for itself 18) sustained market moves are caused by risk takers entering the market, not because of arbitrageurs or HFT. If you contest this point then I dont even know where to start. Seriously!!! Buddy, I understand you want to keep on collecting your bread and butter but I think you should consider your days counted rather than convincing the world is wrong, LOL. You can argue as much as you like but fact is that HFT is still littered with unfair, unequal, and sometimes outright illegal activities, all of them I have outlined above. There is a reason why BATS and Co are under regulatory investigation.
yeah, your buddy in morning robe and boxers running his HFT and making big bucks. I got the story, LOL. Thanks
I never said illegal activies and cheating didn't exist. But it would be foolish to label all HFT with those characteristics. Just like you wouldn't label every day trader as trading on insider information. I am with you and am all for preventing and punishing people who participate in illegal activities. Just don't generalize a huge group of market participants with a handful who exploited stupid exchange design in order to obtain what i consider 'insider information'. I am all for a fair, simple exchange structure which allows both human trading and computer trading to compete on same level from the point their orders arrive at the exchange to the point they are filled.
well at least he talks his book. What else does he have, programming skills and money to pay for the privilege to front run others. Am I surprised?
buddy you utterly fail to comprehend this business. Would HFT not be able to sub penny and glimpse at orders coming into the market the track record would look ENTIRELY DIFFERENT. Most HFT would not even exist, my guess is to the tune of 70-80% would go under. Some retail dude with a self-coded .Net engine to "ADD LIQUIDITY" (as your friend so nicely defined it) really does not qualify as HFT in the broader sense.
Again accusing me of front running. As I had stated before if you have the ability to read. None of my systems have prior knowledge of any orders which arrive at the exchange after mine. Time to take off that tin foil hat and get educated.
so you mean most HFT have the ability to look at orders before they hit and front run others yet most of them are so highly ethical that they would refrain from doing so even its not against the law. I must express my skepticism but thanks for the try.