And the fact that HFT is a growing business indicates to me that there is substantial global benefit to it whether you see it or not.
I don't understand, wouldn't that just mean that it is profitable? Not that HFT is the same as stealing, but if stealing is a growing activity, I don't think we can infer from that that stealing has a global benefit, though it may have a local benefit to the thieves.
And recall that every trade on the market is between parties that willingly entered into the trade (or willingly took on obligations that forced them to make the trade). This happens even at the HFT level. Trade by its nature increases wealth overall and enables the traders to do things they couldn't otherwise do.
Trade increases wealth by allocating services, goods and other resources in a more beneficial way than if there were no trade. Not all trade accomplishes that. If the two of us swap our possessions twice, we haven't really accomplished anything - worse, we've wasted our time and so actually decreased total wealth. I can only see that HFT decreases wealth, by misallocating funds to the HFT activity without there being any substantial global benefit to that and, as you point out, there certainly are downsides even ignoring the misallocation of funds.
The main point of my problem with HFT is that there is no sense in the guy with the slightly faster internet connection or computer algorithm having an advantage. It produces competition for faster speeds that has no advantage, unlike e.g. the competition to allocate funds to the best investments. On top of that, this useless speed competition extracts money from the rest of the market, e.g. in the ways you point out.
Insider trading is illegal, yet it too is between parties that willingly enter into the trade.
That means a bit more economic activity and wealth overall, something that would help me.
Well that's interesting. If you buy to hold for a few minutes or more, HFTers won't be of any help to you, it seems to me. Economic activity does not necessarily imply growth. I see HFT as a whole to be extracting wealth from the economy without growing the economy or otherwise contributing something substantially useful. In the mean time funds and human capital are being allocated to carry out HFT, thus making those resources unavailable for useful pursuits. If that is true then it seems useful to change the rules of the game to make HFT uneconomical. Do you believe that would be a bad idea?
Actually it is quite common in papers that deal with primes in the first place, though the phrase is more often just "Let p be an odd prime" rather than "let p be an odd prime number".
I'm willing to consider that. It seems to me that the extra liquidity on the timescale of milliseconds can be useful with high probability only to someone who is himself doing HFT. So no service is rendered to the rest of the market participants. Is that wrong?
Not that I'm defending the practice, but it does make more sense than depriving of water for running a stop sign. It would be like depriving you of a driver's license for running a stop sign, depriving you of electricity for electrocuting someone and suspending trash pickup if you dispose of illegal substances in the trash.
The system was used for something like sending pictures of suspected card counters and other cheats back and forth
Card counters aren't cheats, it's just that casinos don't like them because they do the same thing with skill that a casino does with manipulating the game. If anything, the casino is cheating.
Yes, it very obviously does have considerable value to the people making money from engaging in it. Other than that using the word "obvious" doesn't stand in the place of an actual argument.
If HQTers only buy goods to sell in less than a second, then there better (for them) be someone to sell it to a second later - and even at a higher price. So if I'm a human making trades I'll hardly even be able to notice the difference in speed of finding a buyer. All that will have happened is that I'll be getting a lower price. As I understand what you wrote, you are saying that if all trades are sped up by less than a second, then this provides information to all market participants that would otherwise only be available to "insiders" - and that this information will never be available on a timely basis without HFT. Unless you are referring to insider trading, I don't know who "insiders" refer to, but more importantly I don't see how HFT provides information to anyone, since HFT is necessarily automated trading and so this trading isn't based on human understanding of the world and it isn't based on pertinent information about the goods being traded that is withheld from everyone except HFTers. What am I missing?
OK, please tell me how that works. It seems to me that since high-frequency traders typically hold a stock for less than a second, the only service they are offering are to make a good sell at most one second sooner than it otherwise would. Unless they are buying from someone else who are also a high frequency trader, selling a second sooner or a second later serves no function to improve the market. Indeed, if the high frequency traders usually make money, they will have traded this worthless service for real money, which seems to me to be a misallocation of funds to an unproductive activity - a case of the market rewarding worse-than-useless behavior. So what am I missing here?
That's interesting. Whenever vital information about a company is known to come out, the stock of that company should not be tradeable until sufficient time has passed for a human to reasonably process the information.
I can't tell if you are are someone defending your own work to assuage your conscience or a troll pretending to do so, but anyway: There is no value to equalizing prices in less than a second, especially when the "equalizing" you are talking about is really just pocketing the difference. The only value there would be in equalizing prices in less than a second would precisely be to remove the threat that these people pose. Since sub-second trades are necessarily automated trades, they also cannot be doing anything sensible to keep prices up to date as real world conditions change, as that requires understanding the real world which an automated system cannot. They serve only the function of increasing profits for their investors - how little or how much damage they cause in the course of that is what is debatable.
Yep, that is a way to not pay sales tax. They have to be able to argue that the purchases are relevant for their business, and in the event that it is discovered that the main use is personal, they are going to be in trouble. Also, in some cases there are taxes you have to pay when a company provides you with items that it is possible for you to use personally, such as if you ever take your work computer home with you.
You weren't being ridiculed very much. It was just an offhand comment this person thought was funny because he thought it applied to the situation. Though there is the deceptive aspect of totc that you are right (I assume) does not apply to you - when someone brings up children not due to any concern for children, but to play on the irrational fears of others. However, you are going to fall under totc in your life not due to knowingly doing so, but because having had children has affected your perceptions such that what appears perfectly reasonable to you actually isn't. Such as in this case.
He didn't take a risk with his children - in the circumstances and within the knowledge the guy had, the maneuver was not and is not a great risk. The fact of children being involved made you misperceive the risk to be "HUGE". You are chastising him, by saying that you feel sorry for his kids, because he had an accurate idea of the situation, i.e. because his thinking was not irrationally affected by the fact of him having children. This seems to happen to many or perhaps even most parents, so it's not just you - it's "think of the children!". Totc is the combination of overestimating risks having to do with children, combined with a low tolerance for risk to children, especially one's own.
Physics fail. I've got four tires on the ground and all four are imparting deceleration to the mass of two vehicles, and the other vehicle has two tires attempting to impart momentum to the same mass. At some point pretty early on, assuming he's got the gas down hard, he's going to start spinning wheels and will have no effective acceleration to match my 4 wheels of deceleration.
The weight on the tires is what is important, not the number of tires. It's not that you've got 4 tires imparting deceleration, it's that you've got the whole weight of your car causing friction with the road. If your brakes only brake with two wheels, that's not so bad because of the loss of surface area being braked with, it's bad because then the part of your car's weight that rests on the non-braking tires don't get to help cause friction to help the braking. So assuming half the weight are on the 2 accelerating tires, that means that it is your tires that will lose if the weight of the other vehicle is double that of your own, and its engine has enough power to make this happen.
I want to say that no company pays sales tax on anything, though they are required to collect sales tax when selling to individuals, as that has always been my impression. However, I have been unable to find support for this position on the internet. So I'm not sure. I can't imagine that having a middleman incurs a 25% tax hit, though.
That's completely useless - a threadmill produces very little energy. Even if you ran non stop until the the threadmill broke down you'd probably not recoup the cost of buying the thing in the first place.
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And the fact that HFT is a growing business indicates to me that there is substantial global benefit to it whether you see it or not.
I don't understand, wouldn't that just mean that it is profitable? Not that HFT is the same as stealing, but if stealing is a growing activity, I don't think we can infer from that that stealing has a global benefit, though it may have a local benefit to the thieves.
And recall that every trade on the market is between parties that willingly entered into the trade (or willingly took on obligations that forced them to make the trade). This happens even at the HFT level. Trade by its nature increases wealth overall and enables the traders to do things they couldn't otherwise do.
Trade increases wealth by allocating services, goods and other resources in a more beneficial way than if there were no trade. Not all trade accomplishes that. If the two of us swap our possessions twice, we haven't really accomplished anything - worse, we've wasted our time and so actually decreased total wealth. I can only see that HFT decreases wealth, by misallocating funds to the HFT activity without there being any substantial global benefit to that and, as you point out, there certainly are downsides even ignoring the misallocation of funds.
The main point of my problem with HFT is that there is no sense in the guy with the slightly faster internet connection or computer algorithm having an advantage. It produces competition for faster speeds that has no advantage, unlike e.g. the competition to allocate funds to the best investments. On top of that, this useless speed competition extracts money from the rest of the market, e.g. in the ways you point out.
Insider trading is illegal, yet it too is between parties that willingly enter into the trade.
That means a bit more economic activity and wealth overall, something that would help me.
Well that's interesting. If you buy to hold for a few minutes or more, HFTers won't be of any help to you, it seems to me. Economic activity does not necessarily imply growth. I see HFT as a whole to be extracting wealth from the economy without growing the economy or otherwise contributing something substantially useful. In the mean time funds and human capital are being allocated to carry out HFT, thus making those resources unavailable for useful pursuits. If that is true then it seems useful to change the rules of the game to make HFT uneconomical. Do you believe that would be a bad idea?
Actually it is quite common in papers that deal with primes in the first place, though the phrase is more often just "Let p be an odd prime" rather than "let p be an odd prime number".
I'm willing to consider that. It seems to me that the extra liquidity on the timescale of milliseconds can be useful with high probability only to someone who is himself doing HFT. So no service is rendered to the rest of the market participants. Is that wrong?
How about phone companies allowing wiretaps when the crimes under investigation have nothing to do with phones?
Not that I'm defending the practice, but it does make more sense than depriving of water for running a stop sign. It would be like depriving you of a driver's license for running a stop sign, depriving you of electricity for electrocuting someone and suspending trash pickup if you dispose of illegal substances in the trash.
The system was used for something like sending pictures of suspected card counters and other cheats back and forth
Card counters aren't cheats, it's just that casinos don't like them because they do the same thing with skill that a casino does with manipulating the game. If anything, the casino is cheating.
I don't think anyone has ever claimed that HFT is bad because the high frequency traders themselves don't make money. That's not the issue.
Wouldn't we smell it also in that case?
Yes, it very obviously does have considerable value to the people making money from engaging in it. Other than that using the word "obvious" doesn't stand in the place of an actual argument.
If HQTers only buy goods to sell in less than a second, then there better (for them) be someone to sell it to a second later - and even at a higher price. So if I'm a human making trades I'll hardly even be able to notice the difference in speed of finding a buyer. All that will have happened is that I'll be getting a lower price. As I understand what you wrote, you are saying that if all trades are sped up by less than a second, then this provides information to all market participants that would otherwise only be available to "insiders" - and that this information will never be available on a timely basis without HFT. Unless you are referring to insider trading, I don't know who "insiders" refer to, but more importantly I don't see how HFT provides information to anyone, since HFT is necessarily automated trading and so this trading isn't based on human understanding of the world and it isn't based on pertinent information about the goods being traded that is withheld from everyone except HFTers. What am I missing?
OK, please tell me how that works. It seems to me that since high-frequency traders typically hold a stock for less than a second, the only service they are offering are to make a good sell at most one second sooner than it otherwise would. Unless they are buying from someone else who are also a high frequency trader, selling a second sooner or a second later serves no function to improve the market. Indeed, if the high frequency traders usually make money, they will have traded this worthless service for real money, which seems to me to be a misallocation of funds to an unproductive activity - a case of the market rewarding worse-than-useless behavior. So what am I missing here?
That's interesting. Whenever vital information about a company is known to come out, the stock of that company should not be tradeable until sufficient time has passed for a human to reasonably process the information.
I can't tell if you are are someone defending your own work to assuage your conscience or a troll pretending to do so, but anyway: There is no value to equalizing prices in less than a second, especially when the "equalizing" you are talking about is really just pocketing the difference. The only value there would be in equalizing prices in less than a second would precisely be to remove the threat that these people pose. Since sub-second trades are necessarily automated trades, they also cannot be doing anything sensible to keep prices up to date as real world conditions change, as that requires understanding the real world which an automated system cannot. They serve only the function of increasing profits for their investors - how little or how much damage they cause in the course of that is what is debatable.
Get a HTML5 browser and you'll never have to see flash for video again if people use this technique.
Yep, that is a way to not pay sales tax. They have to be able to argue that the purchases are relevant for their business, and in the event that it is discovered that the main use is personal, they are going to be in trouble. Also, in some cases there are taxes you have to pay when a company provides you with items that it is possible for you to use personally, such as if you ever take your work computer home with you.
You weren't being ridiculed very much. It was just an offhand comment this person thought was funny because he thought it applied to the situation. Though there is the deceptive aspect of totc that you are right (I assume) does not apply to you - when someone brings up children not due to any concern for children, but to play on the irrational fears of others. However, you are going to fall under totc in your life not due to knowingly doing so, but because having had children has affected your perceptions such that what appears perfectly reasonable to you actually isn't. Such as in this case.
He didn't take a risk with his children - in the circumstances and within the knowledge the guy had, the maneuver was not and is not a great risk. The fact of children being involved made you misperceive the risk to be "HUGE". You are chastising him, by saying that you feel sorry for his kids, because he had an accurate idea of the situation, i.e. because his thinking was not irrationally affected by the fact of him having children. This seems to happen to many or perhaps even most parents, so it's not just you - it's "think of the children!". Totc is the combination of overestimating risks having to do with children, combined with a low tolerance for risk to children, especially one's own.
No he's not. Your perspective is exactly what causes the "think of the children" phenomenon.
Physics fail. I've got four tires on the ground and all four are imparting deceleration to the mass of two vehicles, and the other vehicle has two tires attempting to impart momentum to the same mass. At some point pretty early on, assuming he's got the gas down hard, he's going to start spinning wheels and will have no effective acceleration to match my 4 wheels of deceleration.
The weight on the tires is what is important, not the number of tires. It's not that you've got 4 tires imparting deceleration, it's that you've got the whole weight of your car causing friction with the road. If your brakes only brake with two wheels, that's not so bad because of the loss of surface area being braked with, it's bad because then the part of your car's weight that rests on the non-braking tires don't get to help cause friction to help the braking. So assuming half the weight are on the 2 accelerating tires, that means that it is your tires that will lose if the weight of the other vehicle is double that of your own, and its engine has enough power to make this happen.
I want to say that no company pays sales tax on anything, though they are required to collect sales tax when selling to individuals, as that has always been my impression. However, I have been unable to find support for this position on the internet. So I'm not sure. I can't imagine that having a middleman incurs a 25% tax hit, though.
In Denmark sales tax is 25% on every kind of good, and sales tax evasion isn't that big of a problem.
I think it's too complimentary to say that these people "make" money, though they may succeed in taking money.
That's completely useless - a threadmill produces very little energy. Even if you ran non stop until the the threadmill broke down you'd probably not recoup the cost of buying the thing in the first place.