1) Complete washout of human traders, and those of us left are trading a fraction of the volume we used to. 2) 2007-2009 there was great volatility AND you could still get most fills without HFT pulling quotes or front running and taking your stock. 3) Non algo traders?.....Nobody. Literally, nobody. And the guys who are still making money are making a fraction of what they used to. 4) LOL. That's a joke, right?
"They" know. "They" always know. You know who "they" are right? I can't tell you if you don't know because "they" might be reading this.
You don't get filled one penny higher (unless it's SIRI, CSCO, MSFT, etc). I'm talking about active stocks with spreads. You miss the inside market on NFLX, for example, and your order gets filled .40-.70 cents higher.
i don't have that problem getting filled on the quote. also i will pay a penny up without hesitation. as to nflx etc. i allow myself to pay up more than a .01 because it is a high price stock and one should not expect a penny spread.
All questions that can be answered through basic economics. I've discussed this endlessly on this forum. The markets, like all markets, are becoming more and more efficient. Most traders, not all, but most make their money in some shape or form by exploiting inefficiencies. All industries go through this cycle. Ultimately industries compete on cost and their end products are priced off their marginal cost curves. Over time some firms have the ability to lower their costs and therefore their prices. Firms eventually drop out of the market and the end result is Walmart or some form of Monopoly or Oligopoly. When I was kid computers use to cost 4k to 5k retail. And we actually lifted the offer on them. Now they cost $300. No, I would not recommend my kids going into the computer making business. Why? Because it's "efficient". Ultimately smart people and entrepreneurs look for new industries or inefficient markets to make their buck. I mentioned many times on here, if a 22 year old asked me for advice I would send him into energy. Energy is a huge industry and surprisingly terribly inefficient. Which is why energy traders are still among the highest paid in the business. There are other businesses that are ripe for efficiency improvement such as healthcare, education, waste and even data analysis. The markets are NEVER going to go back to what they were. Just as PCs are never going to sell for 5k again. You are NEVER going to buy one of those old 15 lb cell phones the size of your head. You have to look forward, not backwards. Yes, the market provided some fireworks from 2007 to 2009. But that was only because of the biggest credit crisis in our history. Are you really betting on that? That is the exception not the rule. I wouldn't be hanging around for that again. Ultimately if you analyze all successful people throughout history their fortunes were made entering inefficient markets, not efficient ones. The really successful ones completely transformed their markets to make them efficient. Can you show me one market in the history of this country that after becoming efficient suddenly went back to where it came from being inefficient? Think about it: long distance, dial up internet, computers, television, hell even online porn. You can waste your time shouting at the rain dreaming of the old days or you can use your time more wisely and look to the future. The choice is yours. But nothing that is happening now is any different that what has always happened before. It's wise to study history.
nflx is a 40 vol stock (expected to move $10/day). how wide should the spread be? How much are you trying to make on the stock? Bottom line in the world of trading/portfolio management. No one, other than yourself, is to blame for your losses or inability to make money.
I have long suspected that my broker is predicting my orders by what I type into the their order entry so they can front run my orders. I have proof it's happening, but I won't show it to you.
Good comments. I'd carve out differentiated (actual or perceived) products but otherwise the "efficiency + greater information = lower margins" theme holds up across many businesses, and probably has since the age of the telegraph.
that's all true... and exactly where did all of this peak "efficiency" come from? HFTs and the free reign to front-run orders, manipulate price moves (endless flash-crash events happening all the time) and drain true liquidity from thinner markets (no fills unless you chase price) created this so-called "efficiency" Now your second part of the statement there is equally true, to an extent. WalMart will not reign retail space forever and quite frankly perhaps not to the end of this decade. Nor will the HFT firms rule markets forever. The end result of their ultra-efficiency is an accelerating implosion of the markets. Crude oil futures posted a 60-cent total range in the pit session yesterday, and 75-cent total range today. Both sideways chopped. CL traders used to step away from the desk to piss and refill their coffee cup, return to their seat and the market was 100 cents past where they left a few minutes before. True volume across ALL markets is way down. Individual trader participation is at decade lows and worsening daily. Brokers are dwindling clients. New recruits to the trading industry are nil. Do you know what that spells? Peak efficiency... where eventually there is nothing left but mutual funds, hedge funds and HFT funds. When the next true bear market occurs, what do you predict will happen to financial markets then? It'll look like the vacuum tube formerly known as Russell 2000 futures are in the present. Not sour grapes on my part. Today I went -6 ticks, -2 ticks and +18 ticks per contract ES. Net +10 ticks on three turns, all shorts. My point is, the guys who all spout, "markets are the same as always" and markets have never been better" or "just adapt or perish" are glib. Markets are not the same, they are nowhere even close to unchanged. Markets have changed dramatically if not drastically. And not everyone is capable of adaptation before ruin.