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> high frequency traders are probably making a bundle. I've heard from a former colleague at a major HFT firm, that they hit their entire revenue target for th

> high frequency traders are probably making a bundle. I've heard from a former colleague at a major HFT firm, that they hit their entire revenue target for the year, just in the past week.

totalZero 6y ago
What kind of self-respecting HFT firm has revenue targets? Surely you're talking about P&L.
- jimbob21 6y ago
  They're nearly the same thing in the hedge fund's case. Most of them take some variant of 2&20 still, so 20% of fund profits is their revenue.
  - hawk_ 6y ago
    HFTs are not hedgefunds and generally are marketmakers.
  - FabHK 6y ago
    HFT shops are not hedge funds. They don't need much capital, and I'd say that many have no outside investors. So, their trading PnL minus cost of running the operation is the net profit. On the other hand, the trading PnL will typically be a tiny part of their total trading volume (maybe a few bp).
- deleted 6y ago
  [deleted]
- dcolkitt 6y ago
  Trading revenue. As in “Goldman reported trading revenue of $X”
lifeslogit 6y ago
That is very interesting to hear! I imagined that this was the perfect storm for HFT. Lots of retail investors using default exchange routing settings via brokers like Robinhood and ETrade that sell their order flow. Meanwhile these retail investors are buying small amounts of very volatile equities! Lots of opportunity to rack up lots of pennies.
- dumbfounder 6y ago
  So RobinHood is stealing information from the poor to give to the rich? To make them richer? Surely I am not the first to notice this irony.
  - derefr 6y ago
    To stretch the analogy, the equivalent of an HFT firm in English folklore would probably be a toll-road operator; or a city-state customs officer accepting lesser private bribes in place of levying greater official tariffs on imported goods. Robin Hood, by stealing from the rich and giving to the poor (in a period with commodity currency with no monetary policy), would be encouraging deal-flow (as the rich traders stolen from need to send the same goods again to fulfill their contracts; and the poor now have money to spend to purchase exotic goods, requiring more be imported by traders), in turn increasing travel on the toll-road/through the customs office, in turn making the toll-road operator/customs officer money. It would make perfect sense for the mythical Robin Hood to, in fact, be a toll-road operator/customs officer — or at least to be in cahoots with them. (In fact, come to think of it, he wouldn't even need to steal from the rich, per se. He could just destroy trade caravans, and collect a cut of the revenue from the toll-booth operators; or destroy goods already imported but not yet sold, and collect a cut from the customs office; and then distribute said cut to the poor. The same virtuous(?) cycle would occur.)
  - WorldMaker 6y ago
    Yeah, RobinHood and Citadel Securities (that has been backing most of the options trades here) aren't at all the good guys either. Almost all of Wall Street is a money shuffle, and the "free" trades at retail had plenty of hands skimming the pot and making their own profits.
chollida1 6y ago
Then one of two thing is true. 1) they are lying to you. Look at how much the stock has traded, Its alot but its nothing compared to how much SPY trades in a year. There just wasn't' anywhere near enough trading volume to make an entire year in one week even if they participated in every trade that Gamestop had this past week. 2) they lost money last year so any profit beats last year's pnl?
- 3saryHg6LP2e 6y ago
  Or the spreads/volatility of GME is big/frothy enough that they can make much more per trade
- dcolkitt 6y ago
  GME has been trading at $2 spreads. SPY trades at $0.01 spreads.
  - chollida1 6y ago
    Fully aware I’m in the industry. I stand by what I said:) You said something that was flagrantly wrong, I’m just trying to help correct you.
    - dcolkitt 6y ago
      I’m in the industry too. Average PnL per share traded for a firm doing okay is about $0.001. A decent size firm might do 4% of ADV. Tape A trades about 1.5 billion shares per day. That’s 21 million annual trading revenue. GME traded 1 billion shares in the past week. PnL per share has been averaging close to $0.40. At 6% ADV (HFT market share spikes during volatile periods), that’s 24 million in revenue.
- totalZero 6y ago
  Or (3) they got hit on some GME paper at the outset out of pure luck, and printed the gamma much higher. SPY volume is higher but SPY doesn't realize like GME has. I can tell you're in the industry because you say pnl instead of p&l haha.

> high frequency traders are probably making a bundle. I've heard from a former colleague at a major HFT firm, that they hit their entire revenue target for the year, just in the past week.

totalZero 6y ago

What kind of self-respecting HFT firm has revenue targets? Surely you're talking about P&L.

jimbob21 6y ago
They're nearly the same thing in the hedge fund's case. Most of them take some variant of 2&20 still, so 20% of fund profits is their revenue.
- hawk_ 6y ago
  HFTs are not hedgefunds and generally are marketmakers.
- FabHK 6y ago
  HFT shops are not hedge funds. They don't need much capital, and I'd say that many have no outside investors. So, their trading PnL minus cost of running the operation is the net profit. On the other hand, the trading PnL will typically be a tiny part of their total trading volume (maybe a few bp).
deleted 6y ago
[deleted]
dcolkitt 6y ago
Trading revenue. As in “Goldman reported trading revenue of $X”

lifeslogit 6y ago

That is very interesting to hear! I imagined that this was the perfect storm for HFT. Lots of retail investors using default exchange routing settings via brokers like Robinhood and ETrade that sell their order flow. Meanwhile these retail investors are buying small amounts of very volatile equities! Lots of opportunity to rack up lots of pennies.

dumbfounder 6y ago
So RobinHood is stealing information from the poor to give to the rich? To make them richer? Surely I am not the first to notice this irony.
- derefr 6y ago
  To stretch the analogy, the equivalent of an HFT firm in English folklore would probably be a toll-road operator; or a city-state customs officer accepting lesser private bribes in place of levying greater official tariffs on imported goods. Robin Hood, by stealing from the rich and giving to the poor (in a period with commodity currency with no monetary policy), would be encouraging deal-flow (as the rich traders stolen from need to send the same goods again to fulfill their contracts; and the poor now have money to spend to purchase exotic goods, requiring more be imported by traders), in turn increasing travel on the toll-road/through the customs office, in turn making the toll-road operator/customs officer money. It would make perfect sense for the mythical Robin Hood to, in fact, be a toll-road operator/customs officer — or at least to be in cahoots with them. (In fact, come to think of it, he wouldn't even need to steal from the rich, per se. He could just destroy trade caravans, and collect a cut of the revenue from the toll-booth operators; or destroy goods already imported but not yet sold, and collect a cut from the customs office; and then distribute said cut to the poor. The same virtuous(?) cycle would occur.)
- WorldMaker 6y ago
  Yeah, RobinHood and Citadel Securities (that has been backing most of the options trades here) aren't at all the good guys either. Almost all of Wall Street is a money shuffle, and the "free" trades at retail had plenty of hands skimming the pot and making their own profits.

chollida1 6y ago

Then one of two thing is true. 1) they are lying to you. Look at how much the stock has traded, Its alot but its nothing compared to how much SPY trades in a year. There just wasn't' anywhere near enough trading volume to make an entire year in one week even if they participated in every trade that Gamestop had this past week. 2) they lost money last year so any profit beats last year's pnl?

3saryHg6LP2e 6y ago
Or the spreads/volatility of GME is big/frothy enough that they can make much more per trade
dcolkitt 6y ago
GME has been trading at $2 spreads. SPY trades at $0.01 spreads.
- chollida1 6y ago
  Fully aware I’m in the industry. I stand by what I said:) You said something that was flagrantly wrong, I’m just trying to help correct you.
  - dcolkitt 6y ago
    I’m in the industry too. Average PnL per share traded for a firm doing okay is about $0.001. A decent size firm might do 4% of ADV. Tape A trades about 1.5 billion shares per day. That’s 21 million annual trading revenue. GME traded 1 billion shares in the past week. PnL per share has been averaging close to $0.40. At 6% ADV (HFT market share spikes during volatile periods), that’s 24 million in revenue.
totalZero 6y ago
Or (3) they got hit on some GME paper at the outset out of pure luck, and printed the gamma much higher. SPY volume is higher but SPY doesn't realize like GME has. I can tell you're in the industry because you say pnl instead of p&l haha.