Cool.......seriously though...while I have no love for the HFT guys, I couldn't give a rats arse what they are doing. 1992....back in the days of those green screens (Quotron right....think that was the name).........fast markets in stocks......and me trading US Surgical everyday.....and having to write out tickets for every trade. Miss those days.........
Yup...I think HFT and to a lessor extent, "algos", crowd liquidity at obvious choke points. But only for a fraction of a second. Yes, there's a little more slippage at *some* levels. But it's still far and away, the same game. As far as I can tell, their effect is immaterial, at least under normal market conditions. Still, quote stuffing and order flashing are a blight. They violate the underlying integrity of markets.
I agree about the quote stuffing and flash orders. Both practices are are wrong. The quote stuffing guys can get away with it for most of the time, but once in a while you will see them putting up a fake bid and getting hit by someone faster and then getting rolled pretty good as they look to get the hell out. You see it in some of the thinner futures markets...and is great when they get caught off guard. Sure there is slippage....but back in the days of the specialists very similar things happened. Even worse was when the specialists would get bombarded with a bunch of orders on one side, move the spread out much wider, then print everyone at the worst price. Cancelling those orders was nearly impossible...you saw it happening and knew you were about to get screwed. The guys I hear whine about slippage these days are trading NFLX,AAPL,GOOG, GS.........what do they expect?
Yeah....I hear ya....am goin on 6 yrs myself with same one. Marriage thing comes up more and more. Luckily the football season is about to start so I can't be bothered with that topic until after the Super Bowl...
Great video, thanks for posting it. I studied HFT a little a couple of years ago to understand the impact on my trading. My conclusion is that there is almost no impact to me since I rarely place a stock order over 5000 shares per trade. It is more important to me to simply trade well and HFT will even out for me in the long run. My theory about the trading arms race is that, in the late 90's for a brief while, computing power gave the retail day trader's an edge over the big trading firms, since the big firms had not yet adjusted. Disruptive changes come from the edges not the mainline areas. All companies (most big,staid, and slow to change compared to retail small accounts) began to invest in computers more and more until that edge was closed. The net result was the layoff of the floor people and a move to completely electronic trading. Day traders have much tougher time these days I think. Now we have HFT that continues to give a small edge, but it is similar to a positional edge in chess - it is only temporary.Chess players want permanent edges - material or pawn structure. HFT is similar. I have already seen a major bank write a computer program that will take HFT out as a factor. (It is an obvious edge once you know what the HFT traders are doing.) And there will be more resulting changes coming to the industry. I predict that the edge is fading already and that one day we will pity the HFT folks. That will be time of the next temporary edge to appear. My conclusion of all of this. Today is a great time to be a non-HFT trader!
I'm not a fan of the HFT's either. I think their untethered rein is reaching a point of guaranteed regulation. I recently bought all of the land around one of those "blue dots" Slavin talks about though, not specifically for HFT but for a more stable and uninterpretable data path to the markets. What was once a soybean field, will soon become a field of servers.