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> Presumably you buy all your goods directly from growers / manufacturers, rather than using retailers who are simply there to skim off the top? Grocery stores

> Presumably you buy all your goods directly from growers / manufacturers, rather than using retailers who are simply there to skim off the top? Grocery stores to the things that are difficult for me to do, like sourcing and sorting a wide variety of produce and products. Also, they use economies of scale to make it cheaper than if I were to do the same thing myself without an intermediary. HFT firms neither enable customers to do things they can't accomplish on their own, nor do they save customers money by exploiting economies of scale.

growse 3y ago
> HFT firms neither enable customers to do things they can't accomplish on their own, nor do they save customers money by exploiting economies of scale. Study after study has shown this empirically the be false. It's uncontroversial and established that spreads have significantly tightened (that means it's cheaper for market participants to trade) because of the rise of HFT market makers.
- andrepd 3y ago
  > It's uncontroversial and established that spreads have significantly tightened (that means it's cheaper for market participants to trade) because of the rise of HFT market makers. In more concrete terms, what does it achieve? Genuinely curious. It seems to me that "enabling capital to get better returns" is not a noble goal in itself (especially considering the gilded age levels of inequality we experience in the developed world today).
  - dahfizz 3y ago
    Have you noticed that anyone can get an online brokerage account and have direct market access for zero fees? The liquidity from market makers and HFT firms have ushered in this age of free trading for the lay man. This was not possible even 10 years ago. > It seems to me that "enabling capital to get better returns" is not a noble goal in itself The majority of Americans own stock. Sabotaging the middle class's retirement to give a middle finger to some billionaires does not seem noble to me.
- knodi123 3y ago
  > that means it's cheaper for market participants to trade because of the rise of HFT market makers. Okay, so it makes it easier for some people to become market traders.... but is that beneficial? The money that HFT firms are making has to come from somewhere. The only way an average person can be a market participant and come out ahead, is if they have some inside information that the HFT firms do not. Risky stuff. And the ability for people to make trades that turn out to be winners, is reduced by the massive and aggressive trading done by HFT firms. The massive profits from HFT come from somewhere. Someone is making less because the HFT guys made more. HFT firms do not benefit the average person- unless you define "benefit" as allowing them to have an easier time gambling at a game that has become harder to win.
  - growse 3y ago
    Firstly, HFTs do not generate "massive profits". Not sure where that myth comes from. It's extraordinarily difficult to make profit as a market maker, let alone a "massive" one. Secondly, their income comes from the spread, same as any other market maker. They're able to operate at much lower profit margins exactly because they're HFTs. Making a cent a trade makes no sense if you're doing 3 trades a day. However, it'll quickly become an attractive business if you're doing millions of trades per day. Because spread is what they compete on (and competition is pretty healthy), this drives trading costs down for everyone else.
    - knodi123 3y ago
      > Firstly, HFTs do not generate "massive profits". Not sure where that myth comes from From places like the Tabb Group? "According to research conducted by the Tabb Group, the top 5 High Frequency Trading (HFT) firms make an average of $2 billion a year in profits." > However, it'll quickly become an attractive business if you're doing millions of trades per day Attractive as in profitable? Honestly I don't know what you're trying to get at here. Yeah, their margin is small, and they make massive profits by replacing that with volume. Why is that a controversial claim? > this drives trading costs down for everyone else It really feels like you didn't even read my last comment. Okay, let's grant that they lower trading costs, while extracting many, many billions of dollars from the market. I have a great idea for a business. I'll lower the door charge at vegas casinos, in exchange for bumping the house edge up by a fraction of a percent. There you go, I have made it a lot cheaper for everyone to get in and participate in the craps market. I have offered a valuable service and am in no way a parasite. What's the difference between my business plan, and what you're describing?

growse 3y ago

> HFT firms neither enable customers to do things they can't accomplish on their own, nor do they save customers money by exploiting economies of scale. Study after study has shown this empirically the be false. It's uncontroversial and established that spreads have significantly tightened (that means it's cheaper for market participants to trade) because of the rise of HFT market makers.

andrepd 3y ago
> It's uncontroversial and established that spreads have significantly tightened (that means it's cheaper for market participants to trade) because of the rise of HFT market makers. In more concrete terms, what does it achieve? Genuinely curious. It seems to me that "enabling capital to get better returns" is not a noble goal in itself (especially considering the gilded age levels of inequality we experience in the developed world today).
- dahfizz 3y ago
  Have you noticed that anyone can get an online brokerage account and have direct market access for zero fees? The liquidity from market makers and HFT firms have ushered in this age of free trading for the lay man. This was not possible even 10 years ago. > It seems to me that "enabling capital to get better returns" is not a noble goal in itself The majority of Americans own stock. Sabotaging the middle class's retirement to give a middle finger to some billionaires does not seem noble to me.
knodi123 3y ago
> that means it's cheaper for market participants to trade because of the rise of HFT market makers. Okay, so it makes it easier for some people to become market traders.... but is that beneficial? The money that HFT firms are making has to come from somewhere. The only way an average person can be a market participant and come out ahead, is if they have some inside information that the HFT firms do not. Risky stuff. And the ability for people to make trades that turn out to be winners, is reduced by the massive and aggressive trading done by HFT firms. The massive profits from HFT come from somewhere. Someone is making less because the HFT guys made more. HFT firms do not benefit the average person- unless you define "benefit" as allowing them to have an easier time gambling at a game that has become harder to win.
- growse 3y ago
  Firstly, HFTs do not generate "massive profits". Not sure where that myth comes from. It's extraordinarily difficult to make profit as a market maker, let alone a "massive" one. Secondly, their income comes from the spread, same as any other market maker. They're able to operate at much lower profit margins exactly because they're HFTs. Making a cent a trade makes no sense if you're doing 3 trades a day. However, it'll quickly become an attractive business if you're doing millions of trades per day. Because spread is what they compete on (and competition is pretty healthy), this drives trading costs down for everyone else.
  - knodi123 3y ago
    > Firstly, HFTs do not generate "massive profits". Not sure where that myth comes from From places like the Tabb Group? "According to research conducted by the Tabb Group, the top 5 High Frequency Trading (HFT) firms make an average of $2 billion a year in profits." > However, it'll quickly become an attractive business if you're doing millions of trades per day Attractive as in profitable? Honestly I don't know what you're trying to get at here. Yeah, their margin is small, and they make massive profits by replacing that with volume. Why is that a controversial claim? > this drives trading costs down for everyone else It really feels like you didn't even read my last comment. Okay, let's grant that they lower trading costs, while extracting many, many billions of dollars from the market. I have a great idea for a business. I'll lower the door charge at vegas casinos, in exchange for bumping the house edge up by a fraction of a percent. There you go, I have made it a lot cheaper for everyone to get in and participate in the craps market. I have offered a valuable service and am in no way a parasite. What's the difference between my business plan, and what you're describing?