I know a lot about trading and have intimate knowledge of the mechanics of algos working with developers at the cme. I dont care if you believe me or not. if you listen to what I write it will not only give you a brief history into the mkts and speed but also about how and why they work. we must start with an open free market. the garage sale. you stop by my house. i have a dvd for sale for 15 dollars. you like it and want it. you say..i will pay you bid 5 bucks for it. i laugh and say it was my sons..15. you say..crap but i need it. 10 bucks you say..the bid is 10. i counter OFFER..ok 14 dollars. you get pissed amd drive off. im stuck at with my dvd. another guy stops by and says i want that dvd. i say ok how much..well it aint worth 15..i said i know how about 12. he says well..i only have 10 bucks. i have knowledge of what other people think it is worth. the last guy left. withdrew his bid..cancelled. i want to sell. this guy wants to buy. he says look. ill buy 2 of them for 20!. i said sold. we match. he bought for 10 i sold for 10. we came up with the value. Did we need a middle man to come by HFT and as soon as i said sold at 10...the hft bought it at 10 strong armed this guy and said look. i know it was 10 but it is 10.01 now..or ill mark it up to 11. i got my 10 so i leave. the guys says shit..i need that dvd. ok its only a penny. and ken GriffenHFT made a penny. we did not need the middle man to help us find value. however..he forced himself into my transaction after he knew what i would sell for and what the buyer would buy for. he had that information. ding ding. you ever heard of informed traders. that is what they mean. they know at that microsecond what and how many shares the buyer will pay and what the seller will sell for and then he marks it up a penny. so we really want it we pay the penny. we never needed hft. infact. hft would make the cd slowly rise in price..say 10.02 10.03 10.04 until i just bought it for fear of missing out. fomo. but what if the buyer said no..i wont pay you a penny..well then the hft would say ok by..but the hft doesnt want the dvd. they want the penny. so buyer turns away. hft yells..ok ok. 9.99 man. buyer of dvd turns around and goes to hand over the 10. just then the same hft smiles n says 10.01. wife says its just a penny give it to him and lets go..that dvd will be worth 11 hopefully in a year. hft got penny. dvd owner sold for 10 and the wife got her investment dvd for 10.01. we never invited the hft middleman. electronic mkts never needed middle men. why? supply and demand. hft is only needed for huge institutions to buy stock on sell offs that are initiated by the hft. they mark up they mark down almost at the speed of light. now 1 million dvds is hard to sell all at once..well at a high price yes. but if you want to find lots of buyers you must decrease the price a lot and as buyers show up...dips in the mkt. then u slowly mark up the dvds..8, 8.01,8.02,8.10. now you have control of all the dvd sales because remember as an hft. i know at the microsecond what each buyer and seller will pay for the dvd at that instant. im informed. i use this to my advantage to make money. so i am the spread on every transaction. in the process of controlling all shares because i am fast. i also mark up or down other dvds in line to be sold..spooking buyers and sellers into hurrying up and buying or selling and paying that penny. this is spoofing. spoofing is scaring people to buy or sell that must buy or sell. it also gives me more control so if some bully tries to buy the dvds quickly i can beat him by raising the price more. so..it isnt needed in a real free market. however, as you can see. it is needed in a market that is controlled. if everyone wanted those dvds all at once you can sell a million for 6 dollars instead of 10. but then you are only getting 6 dollars. you lose 4 million. better to have a middle man and give him more information so he can mark up and down the dvds rapidly and get me an average price of 8.02. guess what folks. he keeps the 2 million that they would have all sold at 6 bucks. it is his fee. this gives the million dvds that sold with the hft middleman an artificially inflated price. it also allows full manipulation of all different dvds. it keeps the market from crashing when real people value stocks properly! its dangerous to have uncontrollable real value in this free market. this is why inflated stock prices dont make sense. but that inflation is the hft markup. buyers and sellers will always find value without middlemen. it just might be higher or lower. smart buyers and sellers eventually learn on their own they cannot sell 1million dvds at once. same with buyers. so they would match like 100,000 dvds at a time on their own. this is what a free market is. auctions have fake people that bid prices higher..so do stocks. hope this helped. all retirement investors and traders are the ones paying the markup. not the banks selling it to us thru the hft. this is called execution or executing broker.
as for a brief history on the speed of the stock market. oh yes i believe it was the Rothschilds during a war. they sent a message with pigeons about someone losing the war..decimated. the pigeons were way faster than the horseback messenger. when the pigeons arrived eveyone sold their stock. now who bought that worthless stock? the rothschilds of course because when the horsebacked messenger arrived his truthful message was..we won. victory for all! the stocks shot back up. see speed and information will win a war and can easily win at trading when you know both what the buyer will pay and the seller will sell for and then u spook them into buying qnd selling. hft is 95% of the orders you see on the book. they build their own order book so they know exactly who is buying n selling n they keep track of it all and with the speed advantage. they know they matched your trade Filled before you get your confirmation on the computer screen. its nefarious. criminal. but luckily the cme is self regulating..lol. they want more trades. more money higher stock price. hft pays .12 cents a side before discounts in the emini. so .24 cents round turn and they take liquidity..even if it means trading with themselves. wash trades. fake volume to make it harder for the uninformed traders to try amd game the hft. now..back to speed. then there was physically moving to new york and being a trader at the exchange. this gets you real time access. now it is 12,000 a month at the cme with a 1 year contract. plus fees. but u meed servers and programmers and mivrowqve towers..all this for a tick in the emini? well.thats 12.50 a tick and you get millions a day across ALL products even stocks options and now bonds..which by the way..hft has worked their way into now. expect more fluctuation in rates. my point is that informed traders or they as we call them are only informed for that spread. unless inside information early crop report or earnings. so informed can be just to capture the spread. floor locals knew this and they were needed to help facilitate buys n sells. however. they were not FULLY informed like the hft of today. the hft of today knows what the buyer n seller will both pay and slides in between the orders. slide orders discovered by HAIM BODEK. they probably have fractional ones at the cme..oh wait.that would be illegal. lol. so lets develop this micromini so we can now make our previous illegal activity with fractional fills look legal because you could have a 1.1 emini now. hmmm..they work together cme developers n hft. like hft says. ok. how can i do this with the trade engine and the cme developer says well we cant..right now. but we will change the rules once you tell me how u want them. google cme consolidated ilink message fills cme. yup shaved off 80 microseconds for hft last month. trading will get infinitely harder at least short term. now throw spoofers humans in jail and make it look like the cme n cftc are cracking down..a joke. so then came the electrical stock ticker and faster direct stock ticker lines you could pay extra for..its always been big business to be first. at everything. its always about speed and knowledge. informed.
the cme also has volume discounts..called incentives. remember hft is in stocks too..so if u control futures price discovery and you control stocks..you can really have your way with the indexes. so..why are they here..because the gov. and fed need them to keep it going. that is my first big opinion. i could be wrong. ppt is the hft..look at the time line. in 2008 it wasnt just mortgages it was everything crashing..worse than the great depression. it just didnt happen because they propped it up again. people use the stock mkt to gauge so if it goes up artificially..you are making money artificially and putting it into the hands of real people who put that cash into circulation. which brings up the real problem with bitcoin for the governments. there is a public ledger!!! imagine that.. u cannot just print because there is a ledger and you can see where all those bitcoins go..gov. to banks to clearing houses to stocks then to your account. smart bulls keep buying because they are clued in and have been. bitcoin is a problem for Gov. not a solution. that's why it got hammered and that's is why..think about it..that is why the CME immediately put a futures contact on it!!! no shit. so they can one day manipulate the ledger. dont believe me? open your mind. if things dont make sense then there is something a miss and fake about it.
There are good HFTs that make markets, than there are predatory ones - the penny jumpers that use your limit orders as their hedge, they fill them only when price rolls over. Commissions going down has nothing to do with HFTs. You can tell how long someone has traded by their comments about HFTs - those that traded pre HFT hate the predatory variety which is always there to f*ck with your fills, they cut into the bottom line & cause flash crashes. Maybe a a billionaire could afford to lay fiber between Kansas & New Jersey, it will eat up most of their fortune. All you need to do is to lease a microwave private line from a tier1 Telco IXC. The trailer looks like its a feel good comedy about how silly greed driven people can be, the lesson of the film is that the trader discovers what matters most in life is not money anyway.
Yea but the soes bandits and others cut into MM’s and specialist’s slice of the pie. Why i used slice their pie up fer em.
ROFL. I don't mind the spam rambling, so long as it is properly paragraphed. I just can't read walls of text. Well, I could if I tried, but I dun' wanna'.