5 ms·

You are aware that HFT is essentially dead? It isnt profitable anymore and most of those firms are failing. Trading situations that allow for easy outsized prof

You are aware that HFT is essentially dead? It isnt profitable anymore and most of those firms are failing. Trading situations that allow for easy outsized profits like that disappear very fast.

lin_lin 9y ago
Is this true? Any links? Not doubting you, just interested.
- corporateslave3 9y ago
  Source is I work in the industry. Look at the price of VirtuFinancial stock, who was at one time a premier HFT firm. The amount of disinformation surrounding HFT is staggering.
  - keenerd 9y ago
    Unrelated, but I have a question for you. I've been unable to find a good answer for how exactly HFT benefits the average person. Stuff like antibiotics, electric lights, refrigeration, washing machines, phones, computers all have all led to direct and immediate quality of life improvements. Often on the order of a tenfold improvement for that activity, and they are easily within reach of the majority of the population. What would become 10x worse for the average person if HFT were to vanish overnight? Would mortgage rates massively spike? Would bond rates plummet? Is there some quantifiable financial thing that would regress to whatever terrible situation we were in back in 1990 before HFT was substantial?
    - corporateslave3 9y ago
      Right now the newest investment strategies are taking alternative data sets, like mining website data, and using it to predict stock prices. What value does that provide to the average guy? Nothing but market efficiency. It's just how the industry works.
      - keenerd 9y ago
        Right, but how does "market efficiency" trickle through the rest of society? I can't even find anything that quantifies market efficiency, let alone anyone who has tracked it over the years.
        rtx 9y ago
        Increases market confidence, which in turn promotes economic activity.
        keenerd 9y ago
        Too vague! Since 1990, US population has increased 30% while the (inflation corrected) GDP has increased 90%. So something improved. I'm going to (arbitrarily) say it was computer literacy, since home PC ownership went from 15% of households to 85% of households in that time period. What can you counter with to say that the improvements were from market efficiency? If we never had HFT, how much lower would the GDP be?
        corporateslave3 9y ago
        To be completely honest with you, I think you are trying to back someone into a logical corner on something you dont understand. You are arguing one thing and missing the whole picture.
        corporateslave3 9y ago
        The proper allocation of capital to working business. Are you arguing against the existence of the investment industry? How would capital move around, how would growth occur?
        keenerd 9y ago
        I'm arguing against the existence of things that can't be measured. How is "market efficiency" different from Carl Sagan's "Dragon in my Garage"? It sounds like you saying that private companies that don't participate in the stock market are incapable of managing capital or achieving growth.
    - deleted 9y ago
      [deleted]
    - gnaritas 9y ago
      > Is there some quantifiable financial thing that would regress to whatever terrible situation we were in back in 1990 before HFT was substantial? Yes, trades would cost a lot more. Every time your money was put into a stock, some middle men would take more of it than they do now. Trades would take longer, you might not get the price you thought you were getting when said buy or sell because the price might change in the time it took some dude to go manually buy or sell the shares you requested. That directly affects everyone with a 401k or stock. HFT has eliminated a large swath of useless middle men who were gouging you for money: those middle men are pissed they've been obsoleted and lost access to easily profit and are the now pushing to regular HFT, so they can go back to the good old days of bigger profits and more room for middle men taking a bigger bit of the average mans investment money. HFT saves every market participant money, except the old school traders whom they've largely obsoleted.
- physguy1123 9y ago
  To say it's dead is a bit extreme, but it's not like 2008 when anybody kinda fast could find success. Speed doesn't make money by itself anymore, so a lot of players whose only trick was being fast and not-so-smart are having problems.
- rramdin 9y ago
  https://www.bloomberg.com/news/articles/2017-07-13/they-re-the-world-s-fastest-traders-why-aren-t-they-thriving https://www.bloomberg.com/news/articles/2017-07-13/they-re-t...
sseveran 9y ago
Its not dead. But like any other maturing industry there are now scale advantages. Firms will merge and market making can go back to being the boring activity it has always been.
aphextron 9y ago
Did it serve any higher purpose? Did any meaningful software/hardware advances come out of this? Has it evolved into something else now?
- neomantra 9y ago
  I worked at an HFT firm. We didn't cure cancer, but we tried hard to improve the technical ecosystems we were a part of. Many other firms do the same. We sponsored the x64 port of LuaJIT and kicked off a sponsorship system for it [1]. OpenResty took nginx and integrated it with LuaJIT. Ten years later, CloudFlare started using OpenResty and LuaJIT to protect massive swathes of the Internet. This kind of butterfly effect makes me smile. The same HFT crew discovered critical issues in the circa-2009 Linux kernel, wherein there was significant packet loss on multicast workloads [2]. We were using bleeding edge Debian/Ubuntu distros whereas much of the industry used more stable kernels (which didn't have the issue). So because of our hard work, along with much love from the incredible Eric Dumazet, we figured it out and everybody benefitted (especially RedHat and SUSE who got to put the fixed kernel in their stable releases a couple years later). We also sponsored other open source projects, Debian packaging, etc. HFT firms from 2006-2010 were early adopters of the advanced network and computing technologies that now power the clouds (e.g. Arista, Solarflare, various acquired storage/network companies); those companies might not be around now if they didn't get those early wins from the finance community. [1] https://luajit.org/sponsors.html https://luajit.org/sponsors.html [2] http://www.spinics.net/lists/netdev/msg90771.html http://www.spinics.net/lists/netdev/msg90771.html
  - hendzen 9y ago
    You worked at Athena? The guys who were fined for manipulating the NASDAQ closing auction? https://www.bloomberg.com/view/articles/2014-10-16/high-speed-traders-put-a-bit-too-much-gravy-on-their-meat https://www.bloomberg.com/view/articles/2014-10-16/high-spee...
    - neomantra 9y ago
      I did. Although I left years before that, Athena was not "fined". They settled without admitting any wrongdoing.

You are aware that HFT is essentially dead? It isnt profitable anymore and most of those firms are failing. Trading situations that allow for easy outsized profits like that disappear very fast.

lin_lin 9y ago

Is this true? Any links? Not doubting you, just interested.

corporateslave3 9y ago
Source is I work in the industry. Look at the price of VirtuFinancial stock, who was at one time a premier HFT firm. The amount of disinformation surrounding HFT is staggering.
- keenerd 9y ago
  Unrelated, but I have a question for you. I've been unable to find a good answer for how exactly HFT benefits the average person. Stuff like antibiotics, electric lights, refrigeration, washing machines, phones, computers all have all led to direct and immediate quality of life improvements. Often on the order of a tenfold improvement for that activity, and they are easily within reach of the majority of the population. What would become 10x worse for the average person if HFT were to vanish overnight? Would mortgage rates massively spike? Would bond rates plummet? Is there some quantifiable financial thing that would regress to whatever terrible situation we were in back in 1990 before HFT was substantial?
  - corporateslave3 9y ago
    Right now the newest investment strategies are taking alternative data sets, like mining website data, and using it to predict stock prices. What value does that provide to the average guy? Nothing but market efficiency. It's just how the industry works.
    - keenerd 9y ago
      Right, but how does "market efficiency" trickle through the rest of society? I can't even find anything that quantifies market efficiency, let alone anyone who has tracked it over the years.
      - rtx 9y ago
        Increases market confidence, which in turn promotes economic activity.
        keenerd 9y ago
        Too vague! Since 1990, US population has increased 30% while the (inflation corrected) GDP has increased 90%. So something improved. I'm going to (arbitrarily) say it was computer literacy, since home PC ownership went from 15% of households to 85% of households in that time period. What can you counter with to say that the improvements were from market efficiency? If we never had HFT, how much lower would the GDP be?
        corporateslave3 9y ago
        To be completely honest with you, I think you are trying to back someone into a logical corner on something you dont understand. You are arguing one thing and missing the whole picture.
      - corporateslave3 9y ago
        The proper allocation of capital to working business. Are you arguing against the existence of the investment industry? How would capital move around, how would growth occur?
        keenerd 9y ago
        I'm arguing against the existence of things that can't be measured. How is "market efficiency" different from Carl Sagan's "Dragon in my Garage"? It sounds like you saying that private companies that don't participate in the stock market are incapable of managing capital or achieving growth.
  - deleted 9y ago
    [deleted]
  - gnaritas 9y ago
    > Is there some quantifiable financial thing that would regress to whatever terrible situation we were in back in 1990 before HFT was substantial? Yes, trades would cost a lot more. Every time your money was put into a stock, some middle men would take more of it than they do now. Trades would take longer, you might not get the price you thought you were getting when said buy or sell because the price might change in the time it took some dude to go manually buy or sell the shares you requested. That directly affects everyone with a 401k or stock. HFT has eliminated a large swath of useless middle men who were gouging you for money: those middle men are pissed they've been obsoleted and lost access to easily profit and are the now pushing to regular HFT, so they can go back to the good old days of bigger profits and more room for middle men taking a bigger bit of the average mans investment money. HFT saves every market participant money, except the old school traders whom they've largely obsoleted.
physguy1123 9y ago
To say it's dead is a bit extreme, but it's not like 2008 when anybody kinda fast could find success. Speed doesn't make money by itself anymore, so a lot of players whose only trick was being fast and not-so-smart are having problems.
rramdin 9y ago
https://www.bloomberg.com/news/articles/2017-07-13/they-re-the-world-s-fastest-traders-why-aren-t-they-thriving https://www.bloomberg.com/news/articles/2017-07-13/they-re-t...

sseveran 9y ago

Its not dead. But like any other maturing industry there are now scale advantages. Firms will merge and market making can go back to being the boring activity it has always been.

aphextron 9y ago

Did it serve any higher purpose? Did any meaningful software/hardware advances come out of this? Has it evolved into something else now?

neomantra 9y ago
I worked at an HFT firm. We didn't cure cancer, but we tried hard to improve the technical ecosystems we were a part of. Many other firms do the same. We sponsored the x64 port of LuaJIT and kicked off a sponsorship system for it [1]. OpenResty took nginx and integrated it with LuaJIT. Ten years later, CloudFlare started using OpenResty and LuaJIT to protect massive swathes of the Internet. This kind of butterfly effect makes me smile. The same HFT crew discovered critical issues in the circa-2009 Linux kernel, wherein there was significant packet loss on multicast workloads [2]. We were using bleeding edge Debian/Ubuntu distros whereas much of the industry used more stable kernels (which didn't have the issue). So because of our hard work, along with much love from the incredible Eric Dumazet, we figured it out and everybody benefitted (especially RedHat and SUSE who got to put the fixed kernel in their stable releases a couple years later). We also sponsored other open source projects, Debian packaging, etc. HFT firms from 2006-2010 were early adopters of the advanced network and computing technologies that now power the clouds (e.g. Arista, Solarflare, various acquired storage/network companies); those companies might not be around now if they didn't get those early wins from the finance community. [1] https://luajit.org/sponsors.html https://luajit.org/sponsors.html [2] http://www.spinics.net/lists/netdev/msg90771.html http://www.spinics.net/lists/netdev/msg90771.html
- hendzen 9y ago
  You worked at Athena? The guys who were fined for manipulating the NASDAQ closing auction? https://www.bloomberg.com/view/articles/2014-10-16/high-speed-traders-put-a-bit-too-much-gravy-on-their-meat https://www.bloomberg.com/view/articles/2014-10-16/high-spee...
  - neomantra 9y ago
    I did. Although I left years before that, Athena was not "fined". They settled without admitting any wrongdoing.