For a couple of years now (since the end of 2008), it seems and feels like there is no edge anywhere. Seems to have become a lot more random. Computer driven models, quants, algorithmic systems, high frequency etc are now apparently 80% of all the volume. Things don't correlate anymore on a shorter term basis and of the many many people I know in this business, it seems very few are able to do anything well. Has it become John Connnor vs. the Terminators? Is this every going to change again? Very strange days indeed....open for discussion.
Agreed for strategies involving directional flat price. Strongly disagree for relative value spread trading strategies - especially in the energy and metals spaces.
The banking reg's that "passed" (agreed upon anyway) yesterday should work to limit the HFT going forward by not allowing banks to trade "prop" - or at least limiting it. This is a positive for we traders, possibly a negative for overall trading volume which will affect the exchanges and ECN's. It will be interesting to see how this pans out. Don
As the banks close their HF desks the staff will hang shingles. The more shingles that get hung the edge will dissapear and HF will die... The next golden strat is out there to be discovered already...
There are skads of HF prop shops and private equity funds out there that will pick up any ECN quoting and messaging dropped by the IBs - wishful but unrealistic thinking that HF strategies will fade away with legislation.