Formula 1 racing have different tracks. High/free ways have different tracks. City driving have different tracks. Similarly HFT should have different exchanges.
What are you guys talking about, I trade profitable, I don't want HFT to go away they provide me liquidity when I want to get out.
You have just bought into the biggest wall street lie of all time! HFT to not win 90% of the time. as a matter of fact they blow up more frequently. your math degree means nothing. your computer program is useless. I should know because I worked on Wall Street alongside laser physicist from NASA, mathematicians and the best computer programmers money can buy. If you don't know how to trade it does not matter what you do you will still be a loser. its like giving a 2yr old the keys to your Ferrari. what do you think is going to happen? likewise you can give the keys to a 15 yr old who cant drive and achieve the same result as with the 2 yr old. likewise you can give the same keys to a 90 yr old who does not know how to drive and once again your outcome is the same. bottom line: a proven method or strategy can be optimized to do even better with HFT computers and so on. all the hft does is amplify the method or strategy. thats it!
These are two very different things. One thing that doesn't much change across various forms of this stuff: the success rate is low with either of these. You don't hear about the many HFT's that fail/blow up after making money, nor the ones that started up but never quite made it (just like most indy traders). It's not as though 99% of those who attempt independent trading are choosing between that and working/running a real HFT shop. That's like saying a newbie daytrader has chosen that over an offer from GS . I've done alright, but in the beginning if I had an offer from any BB bank it's not like I would have said "no thanks I'll go it on my own". I'm a dropout, and so didn't have the choice to join a firm where elite pedigree is required. Poor comparison (HFT vs. Indy Trader).
Here is an article on how HFT whipped small traders. http://www.chicagotribune.com/busin...-data-leak-20130424,0,4124230.story?track=rss small traders will always lose! They just lose. http://www.bloomberg.com/news/2012-...-seen-profiting-at-small-firm-expense-1-.html
I'm just going to jump in here without reading the thread until afterwards: Going from 1/8's to 1/16's... 'Fill Prevention'*... Decimalization.... Death of the specialists... other stuff I can't recall at the moment... All of these obstacles felt like a kick to the balls when they occurred, but nothing was able to <b>completely knock me out of the game</b> of short term equities trading until the motherfucking HFT's came along and drank my entire milkshake. *Until some point in '99, you used to actually be able to jump in from of all the Instinet market orders with any limit order! 'Fill Prevention' was what I called the demise of said awesome edge.
Just read this book: Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market by Scott Patterson It answers most of the questions about HFT, and how even very sophisticated traders are being eaten alive by HFT bots.
Sure, no problem! Pre-HFT: There were lucrative, constantly repeating short-term patterns with +EV edge in individual equities. Once a trader recognized any specific pattern, he just had to keep trading that specific setup over and over until that pattern finally cycled out into obsolescence. This could be months or even years. Post-HFT: The algos can recognize repeating short term patterns as well as any human. 60%+ edges are reduced to untradable 51% edges, as the patterns are over-exploited with size by the machines, who are also seeing the quotes/getting filled milliseconds before everyone else. Let alone the way they get to jump a micro-penny in front of the human's limit order, and can cancel/replace to jump to the front a lot faster than he can. Note that I'm not saying that my career as a trader (since 1996) is over or anything like that, but the short term equities game is over for me. I gave that up in 2011, and HFT's were without a doubt the knockout punch.