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I guess it makes complete sense that the markets would plunge simultaneously. Tradeworks had to dump their inventory all at once, otherwise other high frequenc
by jaekwon 16y ago
I guess it makes complete sense that the markets would plunge simultaneously. Tradeworks had to dump their inventory all at once, otherwise other high frequency tradebots would have been tipped off.
BTW, that high frequency trading is good for the market because they provide liquidity, is bullshit. High frequency traders do not trade in stocks with low volume (because it is risky), so they don't add any liquidity that wasn't already there.
There's no legitimate reason, AFAIK, for high frequency trading to be allowed. All they do is syphon away our milkshake in transit from Alice to Bob, because their speed allows them to.
We should be taxing these quick buy-sell trades. At least that way more of the money goes to benefit society. Some equation that taxes at the rate of:
80% profit tax for selling stocks held 10 minutes
50% profit tax for selling stocks held 1 hour
10% profit tax for selling stocks held 24 hours
no tax for selling stocks held 1 week
seems quite fair, would have zero impact for real investors (who are investing in wealth creation, not money creation), eliminate these crazy price fluctuations (that could damage unsuspecting investors' portfolios with stop-sell orders that were meant to protect their investments), and generally help everyone live more meaningful lives.
- yummyfajitas 16y agoHigh frequency traders do not trade in stocks with low volume (because it is risky), so they don't add any liquidity that wasn't already there. Utter nonsense. Many HFT firms trade low volume stocks - low volume stocks have a smaller number of trades, but a higher margin per trade.
- jaekwon 16y agoOK, but we're probably just arguing about definitions. My argument remains that whatever benefit of liquidity that is injected into the market by HFT is offset by the margins that they take away.
- fr0sty 16y agoThis would have massive impact on 'real' investors. If people could not profitably take on short term positions most of the liquidity in markets would dry up. Market Makers and HFT trading groups comprise the great majority of displayed liquidity (and this is precisely the liqudity accessed by 'real' investors when they wish to buy or sell). If that liquidity is removed spreads would widen and 'real' investors would take the hit. On a larger scale imagine a state pension fund or a large mutual fund that has $X billion which it needs to invest in the newly illiquid markets how much price impact will their 2M share order for Ford have now?
- jaekwon 16y agoHow do HFT bots help in your example case scenario? While the mutual fund is buying up Ford shares, the HTF are buying them up and selling them back to the mutual fund with a premium.
- artsrc 16y agoIt seems they don't. The mutual fund wants to buy that day, and the HFC did not do any overall selling or buying on that or any other day.
- andrew1 16y ago> would have zero impact for real investors (who are investing in wealth creation, not money creation) I don't understand what you mean. What is the difference between wealth creation and money creation?
- jaekwon 16y agoThe world could be starving but be rich on paper money. Same goes for gold. We could all be working towards a better world where food / shelter / medicine / sustainability is abundant, but people confuse this real wealth with money, which is an artificial interest bearing / government&Fed inflated accounting construct.