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> High frequency trading gets shat on frequently. It's stupid. This is only a tool that evens out price differences across geological distance. 1. That's a val

> High frequency trading gets shat on frequently. It's stupid. This is only a tool that evens out price differences across geological distance. 1. That's a valuable evening out prices may be a valuable function, but one reason HFT gets shat on is because of the enormous effort put into attempts to arbirage over shorter and shorter time intervals. How does society actually benefit if the prices are equalized over a 1ms interval vs a 1s interval? 2. There are other, more parasitic HFT strategies than arbitrage. One I read about consists of the HFTs putting small tripwire sell orders on some exchanges to detect buy activity, then front running big orders by buying up all the stock on other exchanges and offering it at a higher price. The HFT performs no function besides inserting themselves as a middleman. It's like being on Amazon, clicking buy on a $10 item from seller A, then either having your order fail or be filled by seller B (who themselves just bought from seller A) at a higher price. https://en.wikipedia.org/wiki/Front_running https://en.wikipedia.org/wiki/Front_running https://en.wikipedia.org/wiki/Flash_Boys https://en.wikipedia.org/wiki/Flash_Boys

lintiness 11y ago
front running is illegal, and flash boys is a book packed full of ignorance. there is no outrage over one consumer buying a house or an apple ahead of another. there's no demand for "fair" auctioning of toyota corollas. speed isn't illegal, and it's been a determining advantage in markets for eternity.
- gherkin0 11y ago
  If Flash Boys is full of ignorance, perhaps you could recommend a better book? It also sounds like the term front running refers to many different practices, this is from the Wikipedia article: > One common practice of high-frequency traders (HFT) is a form of front running, where they peer into various exchanges and try to detect orders as they propagate from a broker's order router. > HFT traders place many small orders that indicate buying/selling pressure. Those with the shortest lag in reaching other exchanges then place orders on those exchanges to catch the rest of the order, at a more advantageous price.[6] According to Harvard Political Review writer Austin Tymins, HFT hedge fund Citadel LLC made billions of dollars front-running the trades of large institutional investors, many of which are investing on behalf of middle-class clients.[7]
  - harryh 11y ago
    > If Flash Boys is full of ignorance, perhaps you could recommend a better book? http://www.amazon.com/Flash-Boys-Insiders-Perspective-High-Frequency-ebook/dp/B00P0QI2M2 http://www.amazon.com/Flash-Boys-Insiders-Perspective-High-F...
finnh 11y ago
In contrast to other Michael Lewis fare, Flash Boys sounds poorly researched and based of the anecdotal experience of about 3 people. You'd have to do a _lot_ of buying on other other exchanges to move exhaust the order book to the point that you can make a profit, and there is no way of knowing that the "buy activity" that your "tripwire" detects is, in fact, a harbinger of larger orders on the way to other exchanges. It could just be a single buy order at your tripwire exchange. You have no way of knowing. Read "Flash Boys: Not so Fast" for a highy detailed rebuttal of Flash Boys. It's written by an HFT trader, so it's not intending to be unbiased, but from a logical perspective it does seem to demolish Lewis's points. http://www.amazon.com/Flash-Boys-Insiders-Perspective-High-Frequency-ebook/dp/B00P0QI2M2 http://www.amazon.com/Flash-Boys-Insiders-Perspective-High-F...

lintiness 11y ago

front running is illegal, and flash boys is a book packed full of ignorance. there is no outrage over one consumer buying a house or an apple ahead of another. there's no demand for "fair" auctioning of toyota corollas. speed isn't illegal, and it's been a determining advantage in markets for eternity.

gherkin0 11y ago
If Flash Boys is full of ignorance, perhaps you could recommend a better book? It also sounds like the term front running refers to many different practices, this is from the Wikipedia article: > One common practice of high-frequency traders (HFT) is a form of front running, where they peer into various exchanges and try to detect orders as they propagate from a broker's order router. > HFT traders place many small orders that indicate buying/selling pressure. Those with the shortest lag in reaching other exchanges then place orders on those exchanges to catch the rest of the order, at a more advantageous price.[6] According to Harvard Political Review writer Austin Tymins, HFT hedge fund Citadel LLC made billions of dollars front-running the trades of large institutional investors, many of which are investing on behalf of middle-class clients.[7]
- harryh 11y ago
  > If Flash Boys is full of ignorance, perhaps you could recommend a better book? http://www.amazon.com/Flash-Boys-Insiders-Perspective-High-Frequency-ebook/dp/B00P0QI2M2 http://www.amazon.com/Flash-Boys-Insiders-Perspective-High-F...

finnh 11y ago

In contrast to other Michael Lewis fare, Flash Boys sounds poorly researched and based of the anecdotal experience of about 3 people. You'd have to do a _lot_ of buying on other other exchanges to move exhaust the order book to the point that you can make a profit, and there is no way of knowing that the "buy activity" that your "tripwire" detects is, in fact, a harbinger of larger orders on the way to other exchanges. It could just be a single buy order at your tripwire exchange. You have no way of knowing. Read "Flash Boys: Not so Fast" for a highy detailed rebuttal of Flash Boys. It's written by an HFT trader, so it's not intending to be unbiased, but from a logical perspective it does seem to demolish Lewis's points. http://www.amazon.com/Flash-Boys-Insiders-Perspective-High-Frequency-ebook/dp/B00P0QI2M2 http://www.amazon.com/Flash-Boys-Insiders-Perspective-High-F...