How High Frequency Trading Harms Even Long Term Investors
- Investors are warned against using market orders and stops because HFT can and will suddenly withdraw their quotes. This alone should tell you something is rotten at the core.
- Some universities, such as Georgetown, can no longer afford to buy TAQ market data for their professors or students to analyze. This will lead to less academic oversight, guidance and involvement, as well as students who are less prepared for careers on Wall Street. Data has become prohibitively expensive because of all the excessive quotes generated by HFT.
- Quote spreads are much wider and less stable during market open, which causes many micro flash crashes in individual stocks.
- Misleading price quotes interferes with price discovery, one of the core functions of a stock exchange.
- Mis-allocation of resources, both human and technological.
- If left unchecked by regulators, traders who want to process quotes, will soon need super-computers, 10 gigabit connections and their own engineering staff to have the same basic level of trading information they needed in 2006.
- HFT generated so much Quote Spam in the flash crash, that it took 5 months for the SEC to assemble the data.
- During the flash crash, excessive quotes from HFTs overloaded quote data feeds, causing severe delays: stock quotes from some exchanges were behind over 30 seconds during the height of the flash crash.
But I'm sure these are all good things, and help keep the markets healthy. I must just misunderstand how awesome they are.
So it is possible to create a large volume of "trades" without actually ever buying or selling anything?
They're not _trades_, they're _bids_. What these algos are doing is putting out bid and offer messages and then following them up with cancel messages a few milliseconds later. Here is the Nanex data which should have been linked in the article -- You can see the bids coming up from below and the offers down from above, all cancelled before anyone has time to react to them. If you do the math, even travelling in a straight line at the speed of light many HFT bids and offers don't have time to even make it from New York to Los Angeles before being cancelled. There is no intention of ever completing a trade at all.
It's all being done for the purpose of screwing with the market, flooding the market feeds of smaller players or just messing with other algo traders who may react to the pattern of bids and offers with their own orders. Most sane people agree that it's a bad thing, but it's difficult to decide exactly what can be done to fix it.
I'm from Europe and I don't really get why a strategic reserve of maple syrup is needed... Do you plan on living on maple syrup in case of a nuclear holocaust?
Travel to the USA some time and try the carpenter's glue that passes for "table syrup" there. Then you will understand why we take extreme measures to make sure that Canada never suffers the same fate.
I would tell you why that's a bad idea, but someone might say I was lying about the Philippine government and have me imprisoned for it.
There are some people who believe that a government should pass no laws abridging the freedom of speech or the press, or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. It's not just a passing fancy that they had, it's a response to having lived with the alternative.
Halfway across the river, the frog suddenly felt a sharp sting in his back and, out of the corner of his eye, saw the scorpion remove his stinger from the frog's back. A deadening numbness began to creep into his limbs.
"You fool!" croaked the frog, "Now we shall both die! Why on earth did you do that?"
The scorpion shrugged, and did a little jig on the drowning frog's back.
Technically, the guy never specifically denied being a CIA agent. Why wouldn't he do that? Obviously because he's hiding something.
On to other matters. That little frosted guy on the Mini-Wheats box still hasn't made any official comment on his involvement with the CIA and their HAARP death ray experiments. What's he trying to hide?
This is basically the best reason to read the Honor Harrington series of novels. It blows every other science fiction writer away in terms of portraying eighteenth-century space combat.
There you go. You may want to read Horatio Hornblower some time to see why all of Weber's space ships have sails.
the cost of adjusting the oxygen flow would have added about $100,000 to the cost of each $190 million aircraft.
That's pretty cheap for an aircraft that cost $412 million a piece. And that's just development and production costs, not even touching TCO.
Lockheed-Martin is full of people who didn't want to be the one guy who tacked an extra $100,000 onto the already astronomical cost of the F-22 and then had to justify it. The buck got passed until it was fumbled, and now here we are with a fighter that has killed more of its own pilots than any enemy.
FACT: Half of the women you encounter (unless you're a REALLY poorly groomed neckbeard) will have consenting, spontaneous sex with you. You just got to approach them with some confidence. They sure as shit won't approach you. You can think society and its frequent use of the word "slut" for that.
Clearly, you don't work in the same elementary school that I do.
How about if you stop calling the people who built the company "jerks" and plotting how to get rid of them behind their backs?
Just a thought. It might lead to fewer people realizing that they don't like working with you, leaving the company, becoming competitors, poaching employees and starting legal battles over stupid things that could easily have been sorted out between people who aren't jerks.
A common misconception. The actual phrase is "To all in tents and porpoises", meaning that it addressed to everyone who doesn't care that it's raining.
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It's a good thing there are no phone books on the Internet, isn't it?
Or check my other comments.
Sure. I'll look for all of the comments by "Anonymous Coward". That's very helpful.
I've read about 12 studies now [...] they all conclude the HFT is overall beneficial to the market as a whole.
That's funny. I've read studies which say otherwise, and I can even cite them.
How High Frequency Trading Harms Even Long Term Investors
- Investors are warned against using market orders and stops because HFT can and will suddenly withdraw their quotes. This alone should tell you something is rotten at the core.
- Some universities, such as Georgetown, can no longer afford to buy TAQ market data for their professors or students to analyze. This will lead to less academic oversight, guidance and involvement, as well as students who are less prepared for careers on Wall Street. Data has become prohibitively expensive because of all the excessive quotes generated by HFT.
- Quote spreads are much wider and less stable during market open, which causes many micro flash crashes in individual stocks.
- Misleading price quotes interferes with price discovery, one of the core functions of a stock exchange.
- Mis-allocation of resources, both human and technological.
- If left unchecked by regulators, traders who want to process quotes, will soon need super-computers, 10 gigabit connections and their own engineering staff to have the same basic level of trading information they needed in 2006.
- HFT generated so much Quote Spam in the flash crash, that it took 5 months for the SEC to assemble the data.
- During the flash crash, excessive quotes from HFTs overloaded quote data feeds, causing severe delays: stock quotes from some exchanges were behind over 30 seconds during the height of the flash crash.
But I'm sure these are all good things, and help keep the markets healthy. I must just misunderstand how awesome they are.
So it is possible to create a large volume of "trades" without actually ever buying or selling anything?
They're not _trades_, they're _bids_. What these algos are doing is putting out bid and offer messages and then following them up with cancel messages a few milliseconds later. Here is the Nanex data which should have been linked in the article -- You can see the bids coming up from below and the offers down from above, all cancelled before anyone has time to react to them. If you do the math, even travelling in a straight line at the speed of light many HFT bids and offers don't have time to even make it from New York to Los Angeles before being cancelled. There is no intention of ever completing a trade at all.
It's all being done for the purpose of screwing with the market, flooding the market feeds of smaller players or just messing with other algo traders who may react to the pattern of bids and offers with their own orders. Most sane people agree that it's a bad thing, but it's difficult to decide exactly what can be done to fix it.
I'm from Europe and I don't really get why a strategic reserve of maple syrup is needed... Do you plan on living on maple syrup in case of a nuclear holocaust?
Travel to the USA some time and try the carpenter's glue that passes for "table syrup" there. Then you will understand why we take extreme measures to make sure that Canada never suffers the same fate.
More like ten minutes ago. One Canadian dollar really is worth 1.0251 US dollars. Ten and a half years ago it was at an all-time low of 61.2 cents.
I would tell you why that's a bad idea, but someone might say I was lying about the Philippine government and have me imprisoned for it.
There are some people who believe that a government should pass no laws abridging the freedom of speech or the press, or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. It's not just a passing fancy that they had, it's a response to having lived with the alternative.
Halfway across the river, the frog suddenly felt a sharp sting in his back and, out of the corner of his eye, saw the scorpion remove his stinger from the frog's back. A deadening numbness began to creep into his limbs.
"You fool!" croaked the frog, "Now we shall both die! Why on earth did you do that?"
The scorpion shrugged, and did a little jig on the drowning frog's back.
"I could not help myself. It is my nature."
only wizards can see octarine.
Only wizards and cats.
Clearly the iPhone 5 was designed for the dominant life-form on this planet and not for humans as many seem to believe.
> with a gun you kill people
That's not the only use of a gun. Moron.
Right. You can also hurt them real bad. It's totally different.
Technically, the guy never specifically denied being a CIA agent. Why wouldn't he do that? Obviously because he's hiding something.
On to other matters. That little frosted guy on the Mini-Wheats box still hasn't made any official comment on his involvement with the CIA and their HAARP death ray experiments. What's he trying to hide?
You never know what you'll need. It pays to be prepared for all possible emergencies.
I got the impression that the Cylons were just messing with the surviving humans.
You're close. It's the _writers_ who were messing with the _audience_.
"Any technology distinguishable from magic is insufficiently advanced."
This is basically the best reason to read the Honor Harrington series of novels. It blows every other science fiction writer away in terms of portraying eighteenth-century space combat.
There you go. You may want to read Horatio Hornblower some time to see why all of Weber's space ships have sails.
That reminds me, I forgot to return your copy of "Cradle".
It seems there was a printing error and three quarters of the pages were replaced with a trashy romance novel.
the cost of adjusting the oxygen flow would have added about $100,000 to the cost of each $190 million aircraft.
That's pretty cheap for an aircraft that cost $412 million a piece. And that's just development and production costs, not even touching TCO.
Lockheed-Martin is full of people who didn't want to be the one guy who tacked an extra $100,000 onto the already astronomical cost of the F-22 and then had to justify it. The buck got passed until it was fumbled, and now here we are with a fighter that has killed more of its own pilots than any enemy.
That's easy. All DHS needs to do is borrow a few from some of the busier DMV offices.
FACT: Half of the women you encounter (unless you're a REALLY poorly groomed neckbeard) will have consenting, spontaneous sex with you. You just got to approach them with some confidence. They sure as shit won't approach you. You can think society and its frequent use of the word "slut" for that.
Clearly, you don't work in the same elementary school that I do.
If you have 4 friends(I know that's a stretch) you can buy a 4-pack on Steam
And then pick the one friend you like the least and tell them they can't play with you. That's brilliant!
How about if you stop calling the people who built the company "jerks" and plotting how to get rid of them behind their backs?
Just a thought. It might lead to fewer people realizing that they don't like working with you, leaving the company, becoming competitors, poaching employees and starting legal battles over stupid things that could easily have been sorted out between people who aren't jerks.
But what would I know? I'm probably a jerk too.
The question is why did the electoral college choose an illegal immigrant to be president?
And why don't the windows on airplanes open? Where is the oxygen supposed to come from?
The quality of beer in the US is lower than anywhere else in the world.
Well, it got a response. Isn't that what "response-able disclosure" is all about?
A common misconception. The actual phrase is "To all in tents and porpoises", meaning that it addressed to everyone who doesn't care that it's raining.