4 ms·

I was just going by the post title; thanks for the correction. Also, I was mostly responding to the value/time efficiency part of your comment. By putting in ne

I was just going by the post title; thanks for the correction. Also, I was mostly responding to the value/time efficiency part of your comment. By putting in nearly zero effort, you would get the gains of the total market. While we're here, though, I'm genuinely curious: how accessible is HFT to the average retail investor, let alone those who aren't investing at all? Lastly, can HFT consistently beat a total stock market index like SPTMI year-over-year?

1e-9 8y ago
HFT is not accessible to an average retail investor or even one who is far above average. It requires extensive technological expertise, expensive equipment, and a professional infrastructure. Yes, good automated trading systems can consistently beat any index. With that said, there are bad systems that actually look good for a long period of time until an unusual situation occurs and wipes out all past profits or even brings down an entire firm. Risk management is a key component.
- orojackson 8y ago
  Has there been any serious push to get HFT accessible to the average retail investor in the same way that Vanguard did with the S&P 500? As for beating indexes, it goes back to the age-old question of being able to identify the great automated trading systems.
  - 1e-9 8y ago
    Not that I am aware of. HFT firms generally don't need outside capital, so they have no motivation to deal with the headaches of running a fund. Funds exist for capital-intensive strategies where receiving fees provides a higher risk-adjusted return than the actual strategy.
    - orojackson 8y ago
      I figured HFT firms exist in their own bubble away from most people. So from the perspective of the average joe, they only indirectly exist as a tiny market force that does price discovery. As for the funds you mentioned, are there any that have a minimum investment of less than $1,000?
      - 1e-9 8y ago
        The impact of HFT firms is significant, although not obvious to the average person. Investing directly in a hedge fund requires a much higher initial investment as well as a high net worth. I would not recommend it. It is very difficult to select a portfolio of hedge funds that can outperform a simple low-cost index fund tracking the S&P 500.

1e-9 8y ago

HFT is not accessible to an average retail investor or even one who is far above average. It requires extensive technological expertise, expensive equipment, and a professional infrastructure. Yes, good automated trading systems can consistently beat any index. With that said, there are bad systems that actually look good for a long period of time until an unusual situation occurs and wipes out all past profits or even brings down an entire firm. Risk management is a key component.

orojackson 8y ago
Has there been any serious push to get HFT accessible to the average retail investor in the same way that Vanguard did with the S&P 500? As for beating indexes, it goes back to the age-old question of being able to identify the great automated trading systems.
- 1e-9 8y ago
  Not that I am aware of. HFT firms generally don't need outside capital, so they have no motivation to deal with the headaches of running a fund. Funds exist for capital-intensive strategies where receiving fees provides a higher risk-adjusted return than the actual strategy.
  - orojackson 8y ago
    I figured HFT firms exist in their own bubble away from most people. So from the perspective of the average joe, they only indirectly exist as a tiny market force that does price discovery. As for the funds you mentioned, are there any that have a minimum investment of less than $1,000?
    - 1e-9 8y ago
      The impact of HFT firms is significant, although not obvious to the average person. Investing directly in a hedge fund requires a much higher initial investment as well as a high net worth. I would not recommend it. It is very difficult to select a portfolio of hedge funds that can outperform a simple low-cost index fund tracking the S&P 500.