11 ms·

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.
      - gnaritas 9y ago
        Market efficiency means everyone gets cheaper trades with less slippage and less money going to middle men. All of society benefits from market efficiency. If you have a 401k or any stocks of any kind, you benefit from a more efficient market. Efficient means less money is lost in the transaction to middle men like traders. HFT make less per trade than old school manual traders did because they've out competed them and lowered the spread which means you get a better deal when buying and selling stock.
  - 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...

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.
    - gnaritas 9y ago
      Market efficiency means everyone gets cheaper trades with less slippage and less money going to middle men. All of society benefits from market efficiency. If you have a 401k or any stocks of any kind, you benefit from a more efficient market. Efficient means less money is lost in the transaction to middle men like traders. HFT make less per trade than old school manual traders did because they've out competed them and lowered the spread which means you get a better deal when buying and selling stock.
- 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...