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"All four CPU cores" is a scale that's way too small to even begin considering Hadoop.

Don't use Hadoop - your data isn't that big.

If you want the real story try Stucchio's blog series beginning at: http://www.chrisstucchio.com/blog/2012/hft_apology.html

My pitiful TLDR summary of Stucchio's work combined with some other observations

Stucchio presents a fairy tale, picture perfect world that doesn't exist. Stucchio forgot to mention Brutus' algo which comes along and offers 20.01 for a stock, but cancels it 1 milliseconds later, then offers 20.00 for 1 ms, then 19.99, then 5,000 random prices between 18.00 and 20.00 for the next 800 milliseconds. Sometimes at the top of the book, sometimes not. All to confuse order routers or destroy latency tables in Thor like programs.

When Brutus sees an order coming in on Exchange A, his algo quickly backs off on the other exchanges because it knows that over time, it results in slightly higher profits.

Brutus also knows that exchange B will delay by X microseconds when the total # of messages in symbols A-C exceed 20,000. So if a delay is needed in ABC, just jam the other stocks in that group with useless quotes

I could go on all night.

Most of the whiners on both sides have a dog in the fight, if they are in the business and can't HFT for whatever reason they hate HFT and if they can they love it. Or they're just doing witchcraft style persecution where no logical mechanism is necessary... my sheep died therefore we should hang some old woman is no different than my dotcom bombed therefore we should punish a successful HFT trader "just because".

I don't think it's mere whining to question the social value of HFT. They make a lot of money and it's fair to ask if that's parasitical or real value-add.

Your blogger Stucchio, to his credit, attempts to justify this social value in his second post. But even he agrees that "there is virtually no benefit to speculators from having HFT’s trade in 12ms vs 24ms, or even 24 seconds", and he proposes adding more decimal places to stock prices to encourage HFTs to focus on other aspects of trading.

Most of the whiners on both sides have a dog in the fight, if they are in the business and can't HFT for whatever reason they hate HFT and if they can they love it. Or they're just doing witchcraft style persecution where no logical mechanism is necessary... my sheep died therefore we should hang some old woman is no different than my dotcom bombed therefore we should punish a successful HFT trader "just because".

I don't think it's mere whining to question the social value of HFT. They make a lot of money and it's fair to ask if that's parasitical or real value-add.

Your blogger Stucchio, to his credit, attempts to justify this social value in his second post. But even he agrees that "there is virtually no benefit to speculators from having HFT’s trade in 12ms vs 24ms, or even 24 seconds", and he proposes adding more decimal places to stock prices to encourage HFTs to focus on other aspects of trading.

The NYT article sucked. Can't wait for print journalism to die.
1) Here's some authorities who are authorities because we say so, who are fighting like little middle school drama queens
2) Everyone loves a good "rich people suck and they're corrupt
3) Rabble rousing tired old cliche of "kids have no idea what they're doing vs old people are obsolete"

If you want the real story try Stucchio's blog series beginning at:
http://www.chrisstucchio.com/blog/2012/hft_apology.html

My pitiful TLDR summary of Stucchio's work combined with some other observations

1) Idiotic SEC rule 612 quantizes share price into small enough increments that you can raise the capital to HFT and increments that are large enough that you can make some serious dough doing HFT. HFT is not caused by Bolshevists in your bathroom or too many atheists or gobblin infestations, its caused by a stupid SEC rule that was created in a snap of the fingers and can go away just as quick.

2) Ask ANY EE or "real" telecom guy HFT is a real world application of dithering to improve resolution. Oh the "real" price of a share is 100.003 but we're only allowed to report price to a resolution such that its either of two quantum states 100.00 or 100.01. Simple system solution? Dump out 10 orders, 3 at 100.01 and 7 at 100.00 to meet some idiotic SEC rule. Now "everyone" knows the real free market price is signalled at 100.003 even if the unfree market is only allowed to trade at one cent increments.

3) Most of the whiners on both sides have a dog in the fight, if they are in the business and can't HFT for whatever reason they hate HFT and if they can they love it. Or they're just doing witchcraft style persecution where no logical mechanism is necessary... my sheep died therefore we should hang some old woman is no different than my dotcom bombed therefore we should punish a successful HFT trader "just because".

4) The ratio of HFT trading vs retail trading is absolutely exploding not entirely because HFT is growing (although it is...) but because retail trading is absolutely dying. Retail is dying for two reasons: Headed into next down leg of the second great depression (bubbles usually melt up in price and down in volume) and demographic stuff like looking at labor force participation graphs tens of millions of working age americans are no longer working, therefore there is no need to invest their 401K and IRA money from non-existent jobs. So yes HFT is growing but don't make the mistake of thinking the ratio of HFT to retail is in any way relevant, because retail is terminally ill and almost dead.

5) Some elderly/lazy people get all confused about frontrunning (which is illegal) because both frontrunners and HFTers are nuts crazy about low latency and fast execution. Therefore they obviously must be the same, at least to an idiot. This is about as intelligent as the anti-vaxers ... "Getting hit in the head by a 2x4 causes stupidity... high levels of lead in the blood cause stupidity... therefore getting hit in the head by a 2x4 results in high blood levels of lead". Morons.

6) Some lazy people enter market orders instead of limit orders. Probably not a wise idea any time in the last 150 or so years, although it is an even worse idea when retail volume is melting down and HFT volume is melting up. You could ban market orders for retail investors, but stupid people are always going to find a way to lose money, so I'm not sure there's any point to it. There's an infinite pool of ways for morons to lose money so removing one isn't going to really change the outcome. Its not the end of the world in that any average long term retail investor trade has just about zero odds of being stuck in a "flash-anything" related HFT event.

Someone explain to me why high speed trading is a good idea for anyone?

First off, it doesn't hurt anyone to be able to trade quickly. I'm not saying it is necessary, but it doesn't hurt anything. Think of the stock market like an auction. At an auction, does it matter if someone is able to bid quickly? No. Let them make their bid as quickly as they want. You can respond by making an even higher bid.

That being said, the current latency war is indeed unnecessary. It is caused by SEC Rule 612, also known as the Sub-Penny Rule. This rule prevents market makers from competing on price, so they are forced to compete on speed. For more information, see Part 1 and Part 2 of "A High Frequency Trader's Apology".

Someone explain to me why high speed trading is a good idea for anyone?

First off, it doesn't hurt anyone to be able to trade quickly. I'm not saying it is necessary, but it doesn't hurt anything. Think of the stock market like an auction. At an auction, does it matter if someone is able to bid quickly? No. Let them make their bid as quickly as they want. You can respond by making an even higher bid.

That being said, the current latency war is indeed unnecessary. It is caused by SEC Rule 612, also known as the Sub-Penny Rule. This rule prevents market makers from competing on price, so they are forced to compete on speed. For more information, see Part 1 and Part 2 of "A High Frequency Trader's Apology".

Part 1 Part 2

Part 1 Part 2