Let them. At the end of the day, all they can do is raid each other's pockets between real market moves.
I dont get it. You buy a stock when its cheap and sell it later when its expensive Short stocks that are overpriced and cover. Sell volatility when the waters are choppy. How does any of this effect me.
I read it this AM and the first thing I thought of was: my shop prides itself on 'smart routing', it checks these dark pools first before going to ARCA where I send most of my orders. It amazes me that the owners of these different 'pools' of offboard liquidity don't see the owners of these algo's and ban them from frontrunning their orders. Unless they are such big customers that they are burying this ugly fact for the greater good of their own profits. As more and more of these algo's appear, you'd have to think its going to get pretty crowded and not work anymore. As short-term trader, I personally am trying to adapt by realizing that moves tend to be exacerbated, as do the recoils. Tough and exausting, but it is what it is. If the lobsters migrate out, sell the traps and buy a fishing pole!
My understanding was that the dark pools have banned these algos. That is very telling in itself. Reference: "And a few more questions to add to the ever increasing roster of queries for the NYSE (Mr. Pellecchia- maybe the time has come to provide at least some answers?): some dark pools have banned use of third party algorithms in accessing them in order to prevent harm to their institutional clients. Why is this good for dark pools, but not NYSE?" http://zerohedge.blogspot.com/2009/07/jp-morgan-high-frequency-predator.html I don't see any argument against the fact that the exchanges are beholden to these HFTs when they represent 70% of the volume. How can markets be efficient when they are dominated like never before by one class of trader. This is not how capitalism works. Neither do I see any argument to counter that they drain liquidity. I
The truth is that at least 95% of the socalled traders on this site are either not effected by the hft's or if they are its not going to make a difference between a winning trader and a losing one. However, I do think its BS how this guys have a license to print money which is what they are doing because of this advantage which may or may not be fair.
None of this really matters, as Obama will be taking this away when the new financial regs. are in place. Plus, the end of day trading is coming soon for stocks, derivatives, etc..... courtesy of "the furor" Obama, so enjoy it while you still can.
They can manipulate demand/price and paint charts. Nothing new just more efficient. I'm sure it's the reason for steep rally we have going on right now. I just wonder how well those algos work in reverse.