Let me explain this to you dumb fuck.: Everyone knows where the quotes are disseminated from, your proximity to that dissemination point dictates how fast you see those quotes because they can only travel at the speed of light. If I am trading in Florida and you are trading in Chicago across the street from the CME matching engine you will see everything before me because it takes the data 20ms to travel on a line to Florida from Chicago. That is not called front running OR INSIDER TRADING that is called a latency advantage by proximity. Front Running is when you have information of marketable order that has not been disseminated to the matching engine (ie you are a broker and your client calls you and tells you to buy 5000 spoos and you buy 100 for yourself before you buy his 5000). Inside Information is when you have material non public information about a company or one of its executives/directors. It has nothing to do with a latency advantage by proximity.
Via internalization, market fragmentation, and information asymmetries there are ways for a few very large companies to effectively, though legally, front run order flow. These are market structure and regulatory problems that should, but unfortunately probably won't, be fixed. How exactly is any CME trading company front-running? I am not trying to be an ass. I honestly don't know of any front-running that happens in the CME universe, besides the highly illegal trading ahead of your clients type shit. Similarly, you mention sub-pennying, which as far as I know, is a stock market issue, not a futures market issue. Please enlighten me.
Joovenile, the HFTs won't get caught on a 9/11 situation because they see the orders come into the exchange and yank their orders in time then stuff the order book to slow down the price feeds for mere mortals and fuck them over. True as somebody said, people have only been bitching about HFTs since the phrase was coined, but you will find their predecessors on the futures exchanges such as Eurex, were making an impact and were being bitched about a lot 10 years ago, though maybe not on the net because traders didn't use it so much then. In my opinion the HFT game began in earnest back then on the European futures exchanges, and I imagine that the shenanigans are prevalent in them still. (Such as Eurex selling live customer order info -what's that is it's not selling inside info and I wonder how many of the big clearers do the same with their customer accounts?) I think the HFTs should make their most of their moment in the sun. The only thing for certain in this industry is that the very nature of trading changes dramatically every few years. Very soon you will be yesterday's news and back to fixing your neighbour's computers. As for the wannabe HFters on this forum -by the time you get yourself in a position to cash in the game will be over. Dream on...
You obviously haven't been around long so let me explain something to you , you dic hed If I'm a HFT nerd that gets access to a traders data who trades in large size and I can see as he places his orders and buy and sell in front of them then that is FRONT RUNNING ON ILLEGAL DATA. If I then get a system that is so fast THAT IT CANT BE MATCHED BY THE OTHER GUY EVEN IF HE SITS ON TOP OF THE CME MATCHING ENGINE....... THEN THAT IS INSIDER TRADING. How they get it that fast God only knows but all the evidence points to this. Oh I guess you are one of them fools that believes that everyone is actually trading on the slight delay that is by default on the Eurex exchange?????
GuyFawkes, aha the plot thickens. I've now just realised why they are always flashing orders on the bid 24/7. Can any HFT nerd explain why you keep rolling orders on the bid, not only the closest bid but every bid along the order book?? GuyFawkes has it, the reason they do it is so it stuffs up the order book, slows down the system of us mere mortals and help them to front run and illegally insider trader even more. GuyFawkes YOU ARE A STAR!!!!! When your orders are processed quicker than what is available to every other normal trader out there what do you do? Stuff the order book and SLOW DA FUK OUT OF THE SYSTEM!!! Want proof?? Watch the market tommorrow AT ANY POINT DURING THE DAY and watch the bid. Maybe our HFT nerds here could explain the point of rolling 1 and 2 lot orders during all market hours a full 9 OR 10 PRICES AWAY FROM THE MARKET???? Come on nerds explain the unexplainable
Want more proof of this, watch the bid during moments when the market is moving fast ie after economic releases. THE HFTS GO CRAZY ON THE BID 9 OR 10 PRICES AWAY FROM MARKET. THIS IS THE CATEGORIC PROOF THAT EVERYONE HAS BEEN AFTER THAT HFTS HAVE ACCESS TO PRIVELIGED DATA AND LATENCY AND THEIR MAIN AIM IS TO SLOW DOWN ALL OUR SYSTEMS AND FRONT RUN AND SCREW US OVER. Okay let's do a test 7.30am tommorrow , Non farm payroll number, WATCH THE HFT BIDS JUST WATCH . HFTS YOUVE JUST BEEN OUTED.
These HFT blackboxes are operated/owned by hedge funds or institutional accounts that lease seat from brokers and the brokers/SEC make a tonne of fees from them HFT are like more than 70% of volume HFT are scalpers that have same advantage and privillege like market makers do have access to information as market makers but not same obligations as market makers in providing liquidity like honoring bids /ask and no market manipulation or frontrunning etc. These HFT don't provide liquidity as they don't hold any inventory over night and is actually taking liquidity out of the market like human daytraders or traders. either you can complain to the SEC or exhange or choose to quit the game.these are the new rules of the trading game.70% of the volume is trading.
running stops is their game. cause the exhange is a private company that it's main purpose is to make profit. why would the exchange want to ban HFT if they are like 70% of your profit. small independent human traders have been complaining about the market makers evil axis for years..now it;s just obvious and in your face. play the new rules of the game or leave.
I'm curious how HFT detrimentally affects me. I see price is in an uptrend and it pulls back to the trend line and I trail a buy stop 1 tick above the previous bar's close until the long entry is triggered by price finding support off the trend line and moving up through my buy stop (and I'm thrilled to have a "stop run" because that means my entry is immediately profitable). So my stop order was in place in advance, meaning I'm early in the queue when price hits that level and triggers a market order, so I rarely get any slippage. Once my trade is on, I have a stop loss placed at a price that would signify a break of the trend. How is HFT causing me potential harm and what would be different if there was no HFT?
NoDoji-you don't see how HFTs affect your trading and so that most likely is the case. That doesn't mean they don't do any harm just because they don't affect you.