Perfect answer. HFTs are like wholesellers. They don't not block retail sellers to lose money. When considering liquidity, don't look at the bid and ask volume. Look at the daily trading volume. Traders are more than welcome to changer their orders, put fake orders, put fake high volume sell orders to scare the market. If you cannot tolerate these and want someone to regulate them, you are in the wrong business.
I love the spreads are tighter than ever argument. Just take a look at spreads in the first 3 minutes of the trading day. They are ridiculously wide. Then take a look at the spread on any mid-cap, or small-cap at any time during the day. The spread is wider than ever. And all the liquidity in envelope/floating liquidity. Nothing is solid. When you trade any mid-cap or small-cap, your orders are penny jumped or sub-pennied by the predatory HFT market makers. Small-caps and mid-caps are almost untradeable. And large caps in first two minutes of day are illiquid as well.
There is lack of understanding of basic concepts. You trade on exchange. There has to be other party that wants to trade with you. Participation in the markets is voluntary and nobody has any obligation to buy or sell. Traders set the price at which they want to trade. This is not Wal-Mart and even there prices move (falling prices). You guys are in the wrong place with this list of complains. The only thing that matters is that the other party will fulfill obligations of the trade and the market is transparent with equal access to all willing participants. If you want you can do HFT as well. Barrier of entry is not that high. I have heard of co-lo prices around $4000 a month. You can have server space next door for couple hundreds bucks a month. It is free market and if somebody can make money doing HFT then that means there is some inefficiency in markets that can be exploited. This is called progress. For anything else there are laws that need only be enforced.
We are both entitled to our opinions. At this point we have to adapt. As an older guy I'm tired of hearing how we screwed stuff up for this generation. You now got ownership.
Wish it were that simple to simply co-locate and be on a level playing field. Its internalization that is the biggest advantage, and that has absolutely nothing to do with co-location. Your major HFT players buy their order flow from the retail brokerages, and simply cherry pick the uninformed order flow. The only flow still getting to the exchange is the more informed toxic flow. In other words, it is pros vs pros on the exchange, and pros don't make money trading with other pros.
Agree that there are problems with the markets. Some of the issues are insignificant for retail because I get better fills than expected as well. So it goes both ways. I do not worry that somebody makes few cents on my order. I have easy access, low commission orders get filled and I can set my own price and wait or buy bid or ask. And as I have said very often I get better fills. Really. I remember paying a lot for transaction with no control over it and now it is $1 or less per 100 shares. I can even see my order being posted on the exchange or ECN. Prices jump up and down? So what? After all these are dynamic markets and once you understand it is easier to adjust. Are they not fair for you? Is there anything fair these days?
what about sub penny executions? this imo biggest spit into retail's face..internalization is one thing..sub penny,where we have no rights and ' they' have all the cards(ability to place sub penny AND internalization AND order flow data).....common...give me one of those advantages..i don't need all of them..just one..Archimedes comes to mind..yeah..fucking fair and orderly markets.. if SEC or GVT or whatever are 'pro people' and acting in our best interest-it would be EXACT opposite. retail would have more advantages,encouraging more people to put more their savings into markets...but for whatever reason-SEC and gvt choose the other side..the dark side..cause they owned by WS..END OF STORY
You're speaking of price improvement here. Read this: http://premarketinfo.com/2012/07/23/exploring-the-hidden-costs-of-retail-price-improvement/ All those sub-pennies of price improvement are immediately gone when you miss an execution on your passive limit order. The "price improvement" makes it look like you're getting a better deal. Really you're not. Don't drink the kool-aid.
Interesting article. Thank you. Sometimes I see those fractional prices on my fills but I do not even pay attention to it. I was talking really better fills in the order of whole cents or even more. This "improvement" might be more related to quotation systems because we are seconds behind the exchange if you add quote dissemination time plus all the servers it has to jump back to you. I know that nobody gives me free money there and maybe they take few cents there but still it is not always one way street. But still I place an order and have control over the price and type of order. If somebody jumps in front then it means that I set my timing and price wrong. This is live exchange and it is about money so I would not expect any favors there.