4 ms·

> declaring HFT completely useless, for example. Please do ! The amount of resources invested in making HFT possible and profitable is no where close to being

by IMTDb 5y ago

> declaring HFT completely useless, for example. Please do ! The amount of resources invested in making HFT possible and profitable is no where close to being justified by the benefits it brings to society as a whole. Making financial information move in days instead of week ? Sure !. In hours instead of days ? Yep !. In minutes instead of hours ? Why Not !. In seconds instead of minutes ? Mmmh yeah, I guess. In milliseconds instead of seconds ? Stop it. Opening a road to put high quality cables and hiring some of the most clever folks on the planet to cut half a milisec on a buy/sell algo ? Fuck you.

bradknowles 5y ago
Naw, cable is slow. Even if it's optical. Still slower than direct microwave connection via line-of-sight point-to-point systems. Anyone doing fiber is doing the wrong technology, if they want to minimize total end-to-end latency.
bidirectional 5y ago
Are they? Spreads have tightened massively since the advent of HFT which has knock-on effects for the small investor both in terms of cheaper personal trading and lower costs for those managing their retirement/mutual funds (see Vanguard's opinion on HFT[1]). In terms of resources, Virtu is publicly traded and has a market cap of 6.3bn, Citadel was recently valued at 22bn, the total sector is maybe 100bn. Meanwhile our society ascribes about 260bn of value to Coca Cola alone. [1] https://www.ft.com/content/ff8c6486-cb37-11e3-ba95-00144feabdc0 https://www.ft.com/content/ff8c6486-cb37-11e3-ba95-00144feab...
- sdfgdf 5y ago
- gregw2 5y ago
  Spreads may have tightened, but payments for order flow suggest to me there's a new flavor of front running involved via HFT and dark pools. But I'm no expert.
  - bidirectional 5y ago
    How? No offence but it just sounds like conspiratorial nonsense based on some scary sounding terms. Payment for order flow is an example of the incentives of retail traders, retail brokers and HFT market makers aligning. The market makers are able (and obligated) to improve prices because they have paid to receive flow they are almost certain is not toxic. Meanwhile they charge the likes of hedge funds higher prices as they can't guarantee the reasoning behind their trades (i.e. they may be about to have their faces ripped off). The HFT firm takes their (tightened) fee for making a market, kicks some back to the retail broker, and because the broker earns money that way, they offer commission-free trading to the retail trader.
    - unmole 5y ago
      > No offence but it just sounds like conspiratorial nonsense based on some scary sounding terms. It's exactly that.
    - noodles_nomore 5y ago
      The book Flash Boys deals with this. It's a long time since I read it, but IIRC brokers need to split large orders and route them to different exchanges to get the best price (which is required under 'best-effort execution'). These orders will hit the exchanges at different times giving enough time for HFT to observe them at one exchange and front-run them at the other.
      - unmole 5y ago
        > The book Flash Boys Is a hopelessly bad book. It's a thinly disguised advertisement for IEX. > front-run I do not think it means what you think it means.
      - sonotathrowaway 5y ago
        Most large orders won’t be retail traders though.
  - quickthrowman 5y ago

by IMTDb 5y ago

bradknowles 5y ago

Naw, cable is slow. Even if it's optical. Still slower than direct microwave connection via line-of-sight point-to-point systems. Anyone doing fiber is doing the wrong technology, if they want to minimize total end-to-end latency.

bidirectional 5y ago

Are they? Spreads have tightened massively since the advent of HFT which has knock-on effects for the small investor both in terms of cheaper personal trading and lower costs for those managing their retirement/mutual funds (see Vanguard's opinion on HFT[1]). In terms of resources, Virtu is publicly traded and has a market cap of 6.3bn, Citadel was recently valued at 22bn, the total sector is maybe 100bn. Meanwhile our society ascribes about 260bn of value to Coca Cola alone. [1] https://www.ft.com/content/ff8c6486-cb37-11e3-ba95-00144feabdc0 https://www.ft.com/content/ff8c6486-cb37-11e3-ba95-00144feab...

sdfgdf 5y ago
gregw2 5y ago
Spreads may have tightened, but payments for order flow suggest to me there's a new flavor of front running involved via HFT and dark pools. But I'm no expert.
- bidirectional 5y ago
  How? No offence but it just sounds like conspiratorial nonsense based on some scary sounding terms. Payment for order flow is an example of the incentives of retail traders, retail brokers and HFT market makers aligning. The market makers are able (and obligated) to improve prices because they have paid to receive flow they are almost certain is not toxic. Meanwhile they charge the likes of hedge funds higher prices as they can't guarantee the reasoning behind their trades (i.e. they may be about to have their faces ripped off). The HFT firm takes their (tightened) fee for making a market, kicks some back to the retail broker, and because the broker earns money that way, they offer commission-free trading to the retail trader.
  - unmole 5y ago
    > No offence but it just sounds like conspiratorial nonsense based on some scary sounding terms. It's exactly that.
  - noodles_nomore 5y ago
    The book Flash Boys deals with this. It's a long time since I read it, but IIRC brokers need to split large orders and route them to different exchanges to get the best price (which is required under 'best-effort execution'). These orders will hit the exchanges at different times giving enough time for HFT to observe them at one exchange and front-run them at the other.
    - unmole 5y ago
      > The book Flash Boys Is a hopelessly bad book. It's a thinly disguised advertisement for IEX. > front-run I do not think it means what you think it means.
    - sonotathrowaway 5y ago
      Most large orders won’t be retail traders though.
- quickthrowman 5y ago