7 ms·

I have occasionally let limit orders stand for weeks or more (keeping tabs on the news/fundamentals of the company, of course), knowing that I would be happy to

by ISL 6y ago

I have occasionally let limit orders stand for weeks or more (keeping tabs on the news/fundamentals of the company, of course), knowing that I would be happy to buy/sell the share at the limit price. On some occasions, I've bought shares, using a limit order, at $0.95 and immediately posted the limit sell order at $1.05. Throughout, I believed that the company was worth more than $1.05, but set the limit at a price that provided a margin of safety. If someone else agreed, but was willing to pay $1.05 or more for the shares, I was happy to oblige. When the limit order hit a few weeks later, I took my 10.5% return and went home happy (to place another limit buy order at $0.95). One need not consume all of the value on the table. It is important to leave value for your counterparties, too.

maxbond 6y ago
I wish all the best for my counterparties who provide me liquidity. I congratulate you on your returns. Parasitic parties who skim transactions without providing liquidity are just sucking money from pension funds to transfer to the very wealthy. They're pickpockets. Edited to add: When you executed the trade you described, you did so speculatively - you were in the market with the rest of us, you were taking a risk, and when someone wanted to get into the market you were there to sell to them. That's completely different from holding a position for microseconds when you know for a fact someone is on their way.
- ISL 6y ago
  True -- agreed that a pure front-run that provides no liquidity would appear to have negligible value aside from generating heat. In devil's advocate-mode: The HFT trader is still providing liquidity for that person on the way. If someone else were to purchase the shares ahead of the inbound trade, the inbound buyer might not be able to acquire those shares. If the inbound trade were a limit order, rather than a market order, then the HFT trader might not have room to profit.

by ISL 6y ago

maxbond 6y ago

I wish all the best for my counterparties who provide me liquidity. I congratulate you on your returns. Parasitic parties who skim transactions without providing liquidity are just sucking money from pension funds to transfer to the very wealthy. They're pickpockets. Edited to add: When you executed the trade you described, you did so speculatively - you were in the market with the rest of us, you were taking a risk, and when someone wanted to get into the market you were there to sell to them. That's completely different from holding a position for microseconds when you know for a fact someone is on their way.

ISL 6y ago
True -- agreed that a pure front-run that provides no liquidity would appear to have negligible value aside from generating heat. In devil's advocate-mode: The HFT trader is still providing liquidity for that person on the way. If someone else were to purchase the shares ahead of the inbound trade, the inbound buyer might not be able to acquire those shares. If the inbound trade were a limit order, rather than a market order, then the HFT trader might not have room to profit.