4 ms·

Would you be so kind to explain to me in what way a HTF can provide "liquidity", especially liquidity that would not be there in the first place? By the way, s

• smabie 6y ago
  HFT market makers can quote tighter spreads because they take on less risk. They can take on less risk for some combination of two factors: their speed, and the accuracy of their trading models. Depending on the firm, a different trade off is taken, with some executing obvious strategies the fastest, and others operating at a relatively slow pace, but using much more complex and nuanced strategies. Since market makers quote orders on the book much more often than taking orders off the book (takers have to pay and makers get paid on almost all exchanges), they provide tons of liquidity. For most securities, there are very few natural buyers and sellers of a security, so they would find it very hard to transact without an intermediary market maker. All electronic market makers are HFTers compared to regular market participants, but they run a very diverse set of strategies, with some operating at much closer to human speeds when compared to the fastest of the bunch. Market makers provide better price and execution than traditional human market makers, and are a net positive to the market ecosystem, at least in regards to retail investors (the institional traders do sometimes get fucked).