The same crowd that claims hft / colocated frontrunning scum is just market making, also claimed there was no Mafia.
once again- i did mention 3 very specific issues applied to stocks only :subpenny,pulling out orders before my order can reach them and posting the quotes(thousands of them per second) without intention to buy or sell anything. this have nothing to do with limit order vs market(which would be suicidal in these markets anyway),market making,liquidity, etc..get rid of those 3 above and i have no problem with HFT,just like i have no problem with my broker selling me shares from his own inventory(basically trading against me). as long,as they are match with current NBBO.
canceling orders is nothing new, and that goes back to the obligation thing. and sub pennying, thats a market structure/ rule making issue that goes back to the sec or the exchanges or whatever. I think you gripe is with the rules not with the people taking advantage of them. You want the rules to suit your style of trading and thats fine i guess.
that's the problem with US stock market..combination of the rules and participants that promote zero transparency and fairness between retail and wall street. i know,it was always like this,but today we have complete dominance by wall street over retail.i mean it -COMPLETE. it is your own words and you are correct-HFT does serve today as a sofisticated market marker. market maker,who got all the rules,all the rights,all possible and impossible for retail data and ZERO obligations. that's a big difference,compared to "traditional" MM. at least the old one use to have some obligations. 80% of the volume on US stock market is fake,it's just bots shuffling those shares back and forth..once you step into this market with real order-all that "liquidity, provided by HFT" will disappear,right after you hit your buy\sell button
today,i'm trading 1/3 of my size of let say 2005-2009 levels. because today,same size will have much more significant impact on the stock prices,compared to years mentioned above. HFT "liquidity" my a**.. those papers with fancy formulas are written by academics,i'm practitioner with a quite a bit of experience..
plenty of info on hft and answers some questions and gives insight http://www.tradeworx.com/ http://www.tradeworx.com/TWX-SEC-2010.pdf