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High-Speed Traders Rip Investors Off, Michael Lewis Says

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Re: High-Speed Traders Rip Investors Off, Michael Lewis Says

#71

Post by skybrian »

It seems like the problem is executing a trade when the first buyer (or seller) comes along to take the other side of the trade, rather than waiting a bit to see if someone else will give you an even better price. That is, trades shouldn't execute immediately when prices cross. Instead it should start an auction.

If you're more interested in getting out a few milliseconds sooner than in getting a better price then the front-runner is doing you a service. Otherwise, it seems like the time needed to run a brief auction would be well-spent.

Re: High-Speed Traders Rip Investors Off, Michael Lewis Says

#72

Post by icebraining »

keithwarren wrote: post #61
icebraining wrote: post #30

Earlier quoted context omitted.

But why should we care? The thing I don't understand about the whole debate is, even if the HFTs are milking investors, so what? We're not talking about powerless individuals versus giant companies that we might need to protect, why not just let the investors deal with it by pressuring the exchanges into banning HFTs, or making new exchanges where HFTs aren't allowed? Is it just moral outrage because the HFTs are per…

My outrage (not sure you could really call it that) is not some moral thing or based on a perception that they are doing nothing. My issue comes from the fact that securities trading is based on the idea that we buy and sell parts of these securities under the idea we see value in the company. This fits best with a long term hold position but is not really that divergent with a day trader who buys AAPL today because…

But is there any real externality to society, or are you proposing to tax it out of existence just to maintain the philosophical purity of the markets?

Re: High-Speed Traders Rip Investors Off, Michael Lewis Says

#73

Post by josephlord »

001sky wrote: post #7

The original# piece somehow made it through the cracks at HN. https://news.ycombinator.com/item?id=7500426 6 points by dcaisen 4 hours ago | flag | discuss [no comments] __________ # By Michael Lewis, published in the NYT today

NYT => paywall (maybe a weak one but there nevertheless and I don't read rather than working around it).

Also I suspect (note I have read the NYT piece) that this is an equally original piece and the Michael Lewis with a book to sell has done similar interviews (or other PR such as press releases) with as many relevant publications as possible.

Re: High-Speed Traders Rip Investors Off, Michael Lewis Says

#74

Post by 001sky »

josephlord wrote: post #73
001sky wrote: post #7

The original# piece somehow made it through the cracks at HN. https://news.ycombinator.com/item?id=7500426 6 points by dcaisen 4 hours ago | flag | discuss [no comments] __________ # By Michael Lewis, published in the NYT today

NYT => paywall (maybe a weak one but there nevertheless and I don't read rather than working around it). Also I suspect (note I have read the NYT piece) that this is an equally original piece and the Michael Lewis with a book to sell has done similar interviews (or other PR such as press releases) with as many relevant publications as possible.

The actual Michael Lewis article (linked above) is 10,000 words. It's not (the expected) fluff piece for PR purposes. More reminiscent of how books used to be serialized/published in the press before going to print.

Definitely worth reading.

The piece here is fine for promting discussion but the info in the original work would make that discussion better. Its simple to Delete your cookies and/or just use incognito if the NYT is being a PITA.

Re: High-Speed Traders Rip Investors Off, Michael Lewis Says

#75

Post by [deleted] »

001sky wrote: post #74
josephlord wrote: post #73

Earlier quoted context omitted.

NYT => paywall (maybe a weak one but there nevertheless and I don't read rather than working around it). Also I suspect (note I have read the NYT piece) that this is an equally original piece and the Michael Lewis with a book to sell has done similar interviews (or other PR such as press releases) with as many relevant publications as possible.

The actual Michael Lewis article (linked above) is 10,000 words. It's not (the expected) fluff piece for PR purposes. More reminiscent of how books used to be serialized/published in the press before going to print. Definitely worth reading. The piece here is fine for promting discussion but the info in the original work would make that discussion better. Its simple to Delete your cookies and/or just use incognito if…

[deleted]

Re: High-Speed Traders Rip Investors Off, Michael Lewis Says

#76

Post by foobarqux »

kasey_junk wrote: post #66
foobarqux wrote: post #63

Earlier quoted context omitted.

Flashed orders make it a bit more complicated than you suggest.

As does purchased order flow, internal matching, preferred routing agreements, dark pools etc. But given the simplistic nature of the discussion it is more accurate to say that in general HFT don't see your order before it hits the market than it is to say they do.

Okay, as long as people who actually want to understand the issue know that in many cases HFT firms can actually see orders before they become public although they don't actually do much to disadvantage a retail trader.

Re: High-Speed Traders Rip Investors Off, Michael Lewis Says

#77

Post by adambratt »

foobarqux wrote: post #69
adambratt wrote: post #62

Earlier quoted context omitted.

In my example, they buy before the execute your trade, thus shoving the lowest ask price up to $1134 and fulfilling NBBO.

You said best offer was 1133.90. If buy order is placed at $1134 with HFT firm they must either fill the order at 1133.90 (the NBBO) or pass it on to an exchange that has NBBO. If you are arguing something else happens then you need to explain it clearly step by step in a timeline.

1. You send a trade to your brokerage for GOOG

2. Trade gets routed to an HFT who will fill the trade

3. HFT notices a spike in GOOG interest over a few seconds and starts buying at 1133.90 driving the price up to 1134

4. HFT fills your limit order at the best price of 1134 which they themselves hold.

Despite what the other commentators here have said, limit orders are less safe than market orders to market manipulation. HFT's will buy up all that dumb flow with limit orders and then essentially run the prices to the limit orders in their favor.

Re: High-Speed Traders Rip Investors Off, Michael Lewis Says

#78

Post by harryh »

keithwarren wrote: post #61
icebraining wrote: post #30

Earlier quoted context omitted.

But why should we care? The thing I don't understand about the whole debate is, even if the HFTs are milking investors, so what? We're not talking about powerless individuals versus giant companies that we might need to protect, why not just let the investors deal with it by pressuring the exchanges into banning HFTs, or making new exchanges where HFTs aren't allowed? Is it just moral outrage because the HFTs are per…

My outrage (not sure you could really call it that) is not some moral thing or based on a perception that they are doing nothing. My issue comes from the fact that securities trading is based on the idea that we buy and sell parts of these securities under the idea we see value in the company. This fits best with a long term hold position but is not really that divergent with a day trader who buys AAPL today because…

Do you like the fact that you are able to buy any stock you want pretty much whenever you want? And also can sell any stock you want pretty much whenever you want?

That's a service provided to you by market makers. And it's a service for which they get paid.

Re: High-Speed Traders Rip Investors Off, Michael Lewis Says

#79

Post by harryh »

skybrian wrote: post #71

It seems like the problem is executing a trade when the first buyer (or seller) comes along to take the other side of the trade, rather than waiting a bit to see if someone else will give you an even better price. That is, trades shouldn't execute immediately when prices cross. Instead it should start an auction. If you're more interested in getting out a few milliseconds sooner than in getting a better price then th…

There already is an auction. It happens once per stock market tick.

You don't trade with the first buyer or seller that comes along you trade with the buyer or seller that submits the best price. If a whole bunch of them submit the same price you trade with the one that does it first (hence all the effort HFTs put into moving faster).

Re: High-Speed Traders Rip Investors Off, Michael Lewis Says

#80

Post by harryh »

notastartup wrote: post #58

I thought free market meant equal playing field for all. From what I read, HFT is limited to people with large amount of money both to start and put their money in. I think 30 years ago, HFT traders would've spent jail time.

Lot's of things are limited to people who have (or can raise) a large amount of startup capital. Go try to start a company to compete with Boeing!

There's nothing illegal about an industry with high capital costs.

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