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HFT provides liquidity(a good thing) except when you most need it in times of uncertainty. Example, was the flash crash(I read the report and other sources), H
by sireat 15y ago
HFT provides liquidity(a good thing) except when you most need it in times of uncertainty.
Example, was the flash crash(I read the report and other sources), HFT algorithms (and people too) decided it was getting too risky to provide spreads and just decided to stop trading.
The old market maker system is gone, and we really do not have a substitute that can handle the unpredictable.
That is, HFTs are free to get paid for providing liquidity, but they are also free to pack up the shop and leave, if "things get heavy".
This does not serve institutional and retail investors.
- yummyfajitas 15y agoDuring the flash crash, HFTs did not pull out due to market risk. They pulled out due to regulatory risk. See my explanation here. http://news.ycombinator.com/item?id=2875927 http://news.ycombinator.com/item?id=2875927 If HFT's save retail investors and institutions billions of dollars most of the time, but fail to do so for a single 1-hour period when they run the risk of regulators screwing them over, what's the problem?
- anamax 15y ago> Example, was the flash crash(I read the report and other sources), HFT algorithms (and people too) decided it was getting too risky to provide spreads and just decided to stop trading. Note the word "people".... Are you claiming that someone (or something) has an obligation to trade? Who? (If the answer isn't you....) Why? > The old market maker system is gone, and we really do not have a substitute that can handle the unpredictable. We had "flash crashes" during the old market maker system too, so if you're claiminging that human market makers prevent flash crashes ....