Let me get this straight.... when I trade a stock...I simply am putting money in the market for the computers to trade each other back and forth...the fastest computer wins no? I am not the sharpest nail in the shed compared to you folks...but what has this market become? at least the Buy & Holders could wait it out...now nobody that trades retail stands a chance....or do they? ES
i think you onto something here. Note also that probably 95% of depth are algo. Giving impression of lively market. So these algos chase 5% of orders or even less. You cant tell. In another way... you may easily be the biggest fish in the pond at the time. so you can guess what happens in next couple of seconds even if your order is couple 100K and stop close enough.
I think the magnitude of errors made by retail traders don't translate into immediate profits to HFTers. Instead, they rely on bigger fish to make big money via trading against Institutions and front running the Fed systematically with their better algorithms and liquidity provisioning.
"...but what has this market become?" It has become Skynet from The Terminator films. The machines have taken over. Sure, "Buy & Holders could wait it out", and retail traders can still make a buck, as long as they're willing to stomach the volatility. According to the NY Times article on HFT (high frequency trading): http://hftsecurityrisk.com/2011/01/03/hft-article-in-the-nytimes/ Here's a few paragraphs from the article worth noting: "Even the savings of many long-term mutual fund investors are swept up in this maelstrom, when fund managers make changes in their holdings. But the exchanges are catering mostly to a different market breed â to high-frequency traders who have turned speed into a new art form. They use algorithms to zip in and out of markets, often changing orders and strategies within seconds. They make a living by being the first to react to events, dashing past slower investors â a category that includes most investors â to take advantage of mispricing between stocks, for example, or differences in prices quoted across exchanges. One new strategy is to use powerful computers to speed-read news reports â even Twitter messages â automatically, then to let their machines interpret and trade on them. By using such techniques, traders may make only the tiniest fraction of a cent on each trade. But multiplied many times a second over an entire day, those fractions add up to real money. According to Kevin McPartland of the TABB Group, high-frequency traders now account for 56 percent of total stock market trading. A measure of their importance is that rather than charging them commissions, some exchanges now even pay high-frequency traders to bring orders to their machines."
Well...ummmm....be glad that I don't put you on a certain list... Take a couple of breaths ....breathe deep...(use a bag if you must)... Now...do you feel better now? ES
I miss the ES volatility so much. I remember when you could (correctly) pick a resistance on the hourly chart, and be rewarded with 10-20 points within six hours, if the level stuck. Today it's a clusterf*ck grind higher every day; few, if any down days, and most importantly VERY LITTLE VOLATILITY. We could slowly creeeeep up to 1374! It's ridiculous.