it does seem the % of hypocrites in this thread appears to be a bit on the high side. 20 years ago daytraders were taking the money from the little people, now hft is taking the money from the daytraders. what's the difference? hft is essentially a daytrader, but simply a hell of a lot faster. fake liquidity? true, but let's not be naive about what a daytrader was/is actually adding. yes, of course from a regulatory point-of-view some of the stuff going on right now, not necessarily related to hft in itself, but the way the big boys have trading advantages the little guys can only dream of, is questionable to say the least, but there never has been a level playing field. most here are ticked off most of all by hft apparently having slaughtered their golden goose and are only playing the "fair market"-card to justify their own failure, not so much because they actually give a damn about the markets themselves. being a winner one day, and a loser the next: that's life, get over it.
"unreal" liquidity to me would be orders that show up on slower software as a steady bid/ask size, yet are being continually updated and changed on a faster time scale. Is that what you mean?
Hopefully, my past posts on HFT have made these points clear: I don't care about HFT in my own trading methodology. I don't use liquidity as an edge. I am not 'ticked' off in my trading - pun intended. I agree that there is little difference and the market is evolving. I am naturally curious about what is happening in order to adapt with it. I have defined liquidity as I see it in the post above. The general volume share drop is related to HFT I think. My basic argument is that big trading fish need the little fish because two HFTs can't both make money. One doesn't need a level playing field. One needs the ability to enter the same orders as everyone else and get a fair price. If any trader can enter orders that some traders can't enter, then that is an unfair advantage.
The "unlevel playing field" (of some being able to enter orders that others cannot) is more a function of broker/dealer internalization and PFOF deals with wholesalers, than it is of HFT. Not to say that HFT couldn't use some fixing as well (e.g. by eliminating quote stuffing). http://www.reuters.com/article/2010/12/17/us-markets-dumb-money-idUSTRE6BG2H320101217?pageNumber=1
Add to all this stuff the possible "preorder" front-running http://premarketinfo.com/2012/06/26/can-hft-players-see-your-order-before-you-send-it/
Listen, nobody gives a shit about the "high frequency" in HFT. It's the quote-stuffing (market pollution), flash trading (front-running) and sub-pennying that is literal theft. This is pure crap and needs to end.
The HFT pre screening order flows of pension and mutual funds is geared to robbing investors with front running.They don't need little fish , they need absent investors and accomplices in fund management to assist in thieving from investors , something the white collared parasites of economies have been doing for time immemorial. Even before fast computers , pension investors were fleeced with investments at the day's high , as opposed to what fund manager paid which is a lot lower. How naive can traders be?