this guy is dumb. first, you must be a wolf and make money at the expense of others. who cares if you make it more efficient; make cash. who cares if more stable; make cash. this guy should go work for the peace corp. DOS attack is good, makes millions. millions. riskless trades are genius. and the small guy is dead.
I don't think Citadel pulled their trades as he alleges, not sure how he really knows if he was in his position in the back office.
I have extensive expertise in HFT, and work for a firm that does it now using 90% of my software. Thanks for posting this. I agree with much with what he has to say from a philosophical standpoint. I agree with EVERYTHING he says about Dark Pools, and Quote Stuffing and other abusive tactics. I agree that HFT or any person in existance will back away from an asymmetric risk market, or even one where there is no liqduidity. I have been saying the same thing for 10 years. Where we don't intersect is when he says that HFT doesn't provide liquidity. I think some HFT does provide liquidity in quiet markets and it is in fact what has driven the bid ask spread down so tight [in equities and equity options]. Human beings cannot keep up with penny spreads so easily. There is a distinction between MMing and HFT. One is usually adding liquidity, the other is often taking it. But most of the action in markets is taking liquidity, since most intelligent MMing will hedge and therefore removes liquidity when doing so. Therefore, there MUST be some incentive to provide liquidity, and in every asset class there are those incentives. The collapse of the spread has reduced almost any incentive to make a market in equities or its derivatives. Should HFT be forced to provide markets in any situation? It is a silly question because while they may be in a regime of MMing, they are far more agile than that and there is no legal status to do so. As I have said before, EVEN the people that were LEGALLY bound to do so at the NYSE on Oct 1987 crash, did not even come close to meeting that obligation. Why would you force someone to stand in front of a freight train? See, the whole point is that price is an illusion [or at least not a simple scalar but a slew of components unseen] as I have stated many times on this site, most notably in this thread: http://www.elitetrader.com/vb/showthread.php?s=&threadid=180234&highlight=investing+catechism It is all perception and pumping and dumping. However, price DIFFERENTIALS ARE REAL. If investors traded differentials instead of price, everyone on the planet would make a market even in bad situations. So if you could never enter a single order, but a spread, all this shit would go away. For example, if you could never try to invest on the price of GE, but on the price of GE vs the price of CAT, etc. Look at the price of GM. At its current value, it assumes it will sell a trillion cars for 100 years. No one cares. But what about the price of TSLA vs GM? If you have enough people believing anything, you can create your own illusion. Look at Nazi Germany. The market is always right. Pffffffft
Nitro, have you read Soros? These points regarding price, your points, are the same ones Soros makes, but using different words, related arguments.
price is an illusion, ok, that is a new one on me. I'll take the blue pill please. "You take the blue pill -- the story ends, you wake up in your bed and believe whatever you want to believe." Morpheus, The Matrix
Soros reflexive theory has always had a ring of truth in it to me, and you are right that we are sort of saying the same thing with different words.
SSDD..my brother stock777 and I been talkin about it for years. 8th grade dropout from russia figured this scam many years ago, but idiots on et, sec and dc are unable to see it.they need insider from industry to tell them that.pathetic. all you need is actually TRADE. a real experience from the trenches.this is a continuation of the current trend, where big money get s***t their way and your gvt, who supposed to protect the public's interest is always looking the other way, when it's happening.they (hft) got all the goodies , exemptions, whatever without a single obligation. current stock market situation in us imo truly bizarre.
It is. Just look at the recent float of the Royal Mail in the uk. The price is obviously total bollocks and under valued. I get the feeling most people don't realise how bollocks most prices, like the above person said, it doesn't really matter.