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This needs to be stopped, seriously. I refuse to believe that HFT really adds anything of value to the world.
by lwat 16y ago
This needs to be stopped, seriously. I refuse to believe that HFT really adds anything of value to the world.
- kiba 16y agoWhy do you think HFT does not add any value to the world?
- qq66 16y agoHow would it? What positive externality is generated by HFT's winning and losing money from each other? Are you arguing that the market liquidity provided justifies the amount of effort invested? Obviously it does in some purely capitalistic sense, but what is really created by this activity.
- kiba 16y agoSo you are arguing extremely intense competition is useless. From my point of view, market participants make a living by their ability to execute OODA loops. The bot trading wars is a more extreme version of the competitive process.
- wladimir 16y agoYes, extreme competition is useless. A level of competition is good, because it makes people do their best. But as soon as it becomes too cut-throat, resources are wasted on auxiliary things beyond just being the best and most cost-effective. These electronic trading boats would be an excellent example of "market failure" in this regard. Instead of actual trading boats to trade their food and stuff, we'll now sit in the middle of the ocean to correlate some arbitrary signals... Like excessive speculation in commodities, it doesn't add value. Don't tell me "it adds liquidity" because I already know that. One could argue we have massively enough liquidity already in the things that would actually be arbitraged here. The financial sector overall is much too big: http://www.voxeu.org/index.php?q=node/6328 http://www.voxeu.org/index.php?q=node/6328
- jam 16y ago"These electronic trading boats" Wait... is this a joke?
- jhaglund 16y agowaaaaaait a second. Can you show me how HFT adds value? Because as far as I can tell, it's just a faster middle man playing a zero sum financial game.
- wglb 16y agoHFT provides liquidity to the market.
- lwat 16y agoNobody needs THAT much liquidity. The difference between trading in 1 millisecond and 1 second is negligible for all practical purposes.
- wglb 16y agoNo, the difference between 1 millisecond (and the latency of the good exchanges is smaller than that) means that the faster guy gets the trade, and you don't. You don't provide the liquidity, you don't get the trade. Or, worse, you get half of a two-part trade that you were going to do, and you are stuck holding something or owing something.
- randombit 16y agoI don't see the connection between your first sentence and your second. I don't believe reality television adds anything of value to the world, but that doesn't mean I think it should be 'stopped' (and what does that even mean?). Can you explain?