High-Frequency Trading SP500 - Average daily profit of $395,875

Discussion in 'Index Futures' started by nitro, Dec 27, 2012.

Should HFT be banned?

  1. Yes. It provides no market benefits it is purely hedonistic

    8 vote(s)
    29.6%
  2. No. Be careful what you wish for liquidity will dry up

    12 vote(s)
    44.4%
  3. I don't know

    2 vote(s)
    7.4%
  4. I don't care

    5 vote(s)
    18.5%
  1. nitro

    nitro

    http://www.bloomberg.com/news/2012-12-25/high-frequency-trading-prospers-at-expense-of-everyone.html

    What I don't undertand is, what is inherently wrong with people making money by being faster and smarter as long as they are not spoofing or any other illegal act?

    I have always said over the years, that Mutual Funds are so predictable that all you have to do is front run them. This was done before HFT. Now that they old hands can't do it anymore, they don't like that the torch has been passed on to the faster and more technical?
     
  2. As the paper showed, the HFT effect is even more detrimental in the equities market, where 50% or more of volume are HFT.
    "Next we study how HFTs generate these profits. We decompose traders’ profits by their trading partners. We find that HFT firms’ profits are mainly derived from Opportunistic traders, but also to a
    smaller extent from Fundamental (institutional) traders, Small (retail) traders, and Non-HFT Market Makers. "

    Most investors are now futile traders, and many know it and they have pulled out:

    Investors yank $150 billion from stocks for 3rd year

    http://buzz.money.cnn.com/2012/12/27/investors-stocks-bonds/?iid=HP_LN
     
  3. Once again, retail ahead of the curve vis a vis institutional.
     
  4. How is front-running and quote stuffing "smarter" or "faster"?
     
  5. That article was about nothig. Like Seinfeld show. The author had to write a few lines with the editor's gun pointing to his head.
     
  6. Nothing wrong with HFT. Put a limit order, you know the price sooner or later it will come to you. HFT makes pennies on the trade, people blame HFT because they lose dollars on their stupid trades, makes no sense.

    Sorry, but a few pennies is another "fee" for trading and tight spreads. Deal with it. Again, the only people complaining are those short-term traders out for a free ride.