Appears another pseudo edge has about run its course Be interesting to see if it'll morph or go extinct Thanks 007 RN
I wonder if HFT was only profitable because of all the lovely volatility due to the credit crisis (mid 2007 onwards). This eventually died down and by 2011 they find they cant make money anymore. Even RSJ stopped posting its volume figures around then. HFT trading has high overheads, they need volumes and volatility to exploit otherwise it cant be worth it??
I think HFT wiped out so many traders that eventually its profits collapsed due to the lack of volume and volatility they sucked from the market. There are so few participants left, and the ones who are still around do a fraction of the volume they used to. HFT was like putting sharks in a giant fish tank. Eventually they ate all the fish then the smaller sharks until there was nothing left to eat. Now you have Getco, Hudson River Trading, Citadel and a handful of other "great whites" circling the waters for scraps. Hope they rot.
You need to read HFT myths thread on ET to better understand HFT: http://www.elitetrader.com/vb/showthread.php?s=&threadid=266552 Very professional and informative. On the opposite: It is very interesting to see so many anti HFT rants on ET posted by people who are interested in trading yet they demonstrate that they have zero understanding of markets and trading.
Getco profits down 90% wow ! I have to ask myself if that story doesn't have any bit of PR in it, I am sure the HFT community would rather tell the world, "hey we don't make that much money, life is tough if you regulate more, we 'll stop creating jobs" . But beyond that, you don't have to be a genius to realize that the edge these guys had will become smaller and smaller over time, just like for all traders in general .
you don't have to read..you have to trade..a lot...short term,intraday.like i do. large baskets,lot of stocks. to see the impact of hft. they are leeches. lobbied and covered by SEC(because of whom we have current micro-structure). i've been saying same thing for many many years.WAAAY before this hft business killed most of 'pros' here ,on ET. how the prop shops are doing? how ET is doing? how retail trading is doing? how Don Bright is doing? they all GONE. because of current stock market microstructure.
Not that I followed the "20XX Trader P/L" blotter threads very closely over the years, and this is very anecdotal, but it doesn't seem very lively in there compared to prior years. Perhaps this is simply a symptom of low volatility. We could compare 2013 P/L thread to some other low vol period like 2005 or 2006 and ballpark the blotters per day or week...
Do not forget that this new market microstructure replaced old market structure where commission was at least $100 and spread was often more than $1. Good luck with your intraday "lots of trading" trying to reach your broker over the phone who is on his 1 1/2 hour lunch break. And if things went really bad (1987 for example) you could not reach your broker for couple of days. Many fund managers miss close relationship with specialists and MM's where few phone calls help them to window dress their portfolio performance and pocket nice performance bonuses. From hunters they became hunted. All of them miss old good days. I guess you are getting nostalgic too. In addition you mistake cause with effect. The reason for market shift is drain on liquidity away from real economy to deficit economy driven by excess of debt and monopolization of financial institutions dependent on government and vice versa. HFT is just distraction so people will never notice what really hit them.