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I am aware that people believing a thing doesn't make it true. I am also aware of the arguments in favor of HFT. As you stated, the oft-made claim that the mar

I am aware that people believing a thing doesn't make it true. I am also aware of the arguments in favor of HFT. As you stated, the oft-made claim that the market is improved is theoretical as well; hence, is also a product of "belief". It's not a settled question. [0] >The point of a market is to expediently arrive at the best (as in, most reflective of intrinsic value) price Yes. [0] https://www.investopedia.com/ask/answers/09/high-frequency-trading.asp https://www.investopedia.com/ask/answers/09/high-frequency-t...

tptacek 8y ago
The improvement I'm talking about is objective: in the former case, by competing down spreads and minimizing the cost to execute any given trade, and in both by expediting price discovery. You can disagree that these are things worth optimizing (though if you weren't careful you'd risk arguing in some sense against the premise of a market), but it's less clear to me how you'd argue that the causality is other than what my argument says it is.
- unclebucknasty 8y ago
  I don't dispute that HFT can reduce spreads. The question is whether that benefit may come at some expense to smaller investors. See the previous link I posted. Also, of course, "Flash Boys" by Michael Lewis. There is no shortage of discussion around this question.
  - tptacek 8y ago
    How does that question even make sense? By definition, the spread is a tax investors --- including small investors --- pay to buy or sell a holding. In what way could they possibly benefit from wider spreads? Regarding Flash Boys: I don't know of a single person who works in trading who has stuck up for that book. I strongly recommend "Flash Boys: Not So Fast", which debunks it but is also much more interesting from a technical perspective than Lewis's book.
    - unclebucknasty 8y ago
      >in what way could they possibly benefit from wider spreads? Never said that. We seem to be having trouble communicating. It happens. Thanks for the discussion.

tptacek 8y ago

The improvement I'm talking about is objective: in the former case, by competing down spreads and minimizing the cost to execute any given trade, and in both by expediting price discovery. You can disagree that these are things worth optimizing (though if you weren't careful you'd risk arguing in some sense against the premise of a market), but it's less clear to me how you'd argue that the causality is other than what my argument says it is.

unclebucknasty 8y ago
I don't dispute that HFT can reduce spreads. The question is whether that benefit may come at some expense to smaller investors. See the previous link I posted. Also, of course, "Flash Boys" by Michael Lewis. There is no shortage of discussion around this question.
- tptacek 8y ago
  How does that question even make sense? By definition, the spread is a tax investors --- including small investors --- pay to buy or sell a holding. In what way could they possibly benefit from wider spreads? Regarding Flash Boys: I don't know of a single person who works in trading who has stuck up for that book. I strongly recommend "Flash Boys: Not So Fast", which debunks it but is also much more interesting from a technical perspective than Lewis's book.
  - unclebucknasty 8y ago
    >in what way could they possibly benefit from wider spreads? Never said that. We seem to be having trouble communicating. It happens. Thanks for the discussion.