Are there any protections in place for if an investor is hovering a cursor over a buy button that the stock doesn't get pumped up?
High-Speed Trading Isn't About Efficiency—It's About Cheating
31–40 of 123 posts
Re: High-Speed Trading Isn't About Efficiency—It's About Cheating
#32I don't know how I personally feel about HFT. I don't have a high enough view of the system as a whole to make a determination if HFT is or will be a problem.
But the mention (http://www.cnbc.com/id/100809395) of Reuters selling data to customers 2 seconds before the conference calls (which occurr 5 minutes before the public receives the data) unsettles me a bit. Two seconds isn't a long time except when you consider that HFT operates in milli, micro, or maybe even nano seconds.
I am not sure whether I would go as far as to consider it insider trading, but I do think the conference call and the data meant for HFT should all be released at the same time as the public data.
Re: High-Speed Trading Isn't About Efficiency—It's About Cheating
#33The primary function of the stock market is to exchange ownership (shares) in a company. It's odd that we seem to have forgotten that. What value is there in a computer owning a stock for 10 milliseconds?
I've read elsewhere on here that the value of high-frequency trading is that it reduces transaction costs and increases liquidity in the market. I.e. it makes it easier for the humans to buy and sell at the prices they wish to buy and sell at. Assuming that's true, the question then becomes what are the costs and externalities of HFT and, in balance, are we willing to make those trade-offs? I haven't seen anything ad…
Since most of the people commenting here don't seem to even understand HFT, I'll just leave this here (a tutorial I wrote a while back):
http://www.chrisstucchio.com/blog/2012/hft_apology.html
http://www.chrisstucchio.com/blog/2012/hft_apology2.html
http://www.chrisstucchio.com/blog/2012/hft_whats_broken.html
Re: High-Speed Trading Isn't About Efficiency—It's About Cheating
#34A few immediate thoughts: Transaction volume is ultimately not the important metric--revenue is. And, following [1], it seems that the total revenue for HFT was probably around $2Billion in 2013--for a whole industry, that's not very much! Measuring transaction volume is akin to comparing shipping between Amazon and Walmart ignoring the fact that Amazon ships directly to consumers while Walmart mostly ships to large…
See, here's the thing I don't understand about liquidity: If it's so valuable for trades to execute in microseconds instead of seconds, and the stock exchanges recognize this value and provide co-location etc to enable it, why are so many stock exchanges closed for half to two thirds of the day? [1] Surely the 15+ hour shut downs are a much bigger limit to liquidity than a few microseconds here and there? There's obv…
Trades executing in microseconds is about beating the other HFT. It's useless for consumers.
Price competition (one HFT bidding 10.01 instead of 10.00) and depth of book (the ability to buy 10,000 shares in one shot) is what helps traders.
Re: High-Speed Trading Isn't About Efficiency—It's About Cheating
#35Lost me at That brings us to high-frequency trading (HFT) hedge funds. These funds use computer algorithms—a.k.a.: algobots No-one says this. I'm not involved in HFT myself but I know a bunch of people who are, there is a jargon word, but it's not that.
A quick Googling reveals that some people do use algobot to talk about HFT software.
I guess it's a dumbed down idea to sell to the masses.
Re: High-Speed Trading Isn't About Efficiency—It's About Cheating
#36I don't get it. The article first criticizes HFT for making markets rather than speculating, incorrectly asserting that it's somehow a tax on traders (hint: don't cross the spread if you don't want to pay the "tax"). Then it reveals that HFT does speculate - they pay people to do market research and trade on that basis, which is somehow also evil. Damned if they do, damned if they don't I guess. The authors reasoning…
The author's point is clear - that HFT adds no value to society ("socially worthless"). I don't believe that he wants to prevent anything, but he suggests that trades should be taxed to create some value to society from this. He is suggesting their value (at the moment) is exclusively to the benefit of making rich people - who can pay for access early information and technology - richer.
There is a subset of HFT (Arbitrage) that does have a value to society, because it allows you to trade between markets without fearing that you're somehow losing out (Because the arbritage players would have swept that up).
Re: High-Speed Trading Isn't About Efficiency—It's About Cheating
#37The primary function of the stock market is to exchange ownership (shares) in a company. It's odd that we seem to have forgotten that. What value is there in a computer owning a stock for 10 milliseconds?
Sure, but now it's on you to say how long a stock should be owned for, and why that is. I mean, you could ban HFT and say that you can trade no more than once a second, or a minute, or whatever. Then people would get upset because computers could trade exactly on that second...
> Then people would get upset because computers could trade exactly on that second...
I would think the way to do it would be to hold every trade open for five seconds during which time either party can cancel it.
Re: High-Speed Trading Isn't About Efficiency—It's About Cheating
#38[deleted]
Re: High-Speed Trading Isn't About Efficiency—It's About Cheating
#39In other news gravity works on apples and spicy food can be enjoyable.
Re: High-Speed Trading Isn't About Efficiency—It's About Cheating
#40No new insights in this article.
What I've been thinking about recently though is that the problems HFT companies work on may have unexpected benefits in other fields. For instance they are working on things like machine learning, transmission speed, long range networking, mathematical modelling, and software. If we were to ban HFT we would lose the potential upside of all this. In the words of NN Taleb, this sort of 'stochastic tinkering' is primarily how scientific progress is made.