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> There is an extremely high probability NYSE TX remains in Mahwah > I wish one of these venues would have the conviction to put their whole kit in Dallas To

> There is an extremely high probability NYSE TX remains in Mahwah > I wish one of these venues would have the conviction to put their whole kit in Dallas To be fair, few people actually host in Mahwah or Carteret anymore. The HFT game is essentially closed, as the price of entry in terms of knowledge and capital is too high. Most people just prefer a comfy Equinix DC with all modern amenities, where NYSE, Nasdaq and all other markets & brokers have a latency-stable point of presence, such as NY4.

parasense 2y ago
You did raise a good point about latency sensitive brokers, and I feel like that is becoming a self-selecting cartel based around the NY/NJ area. So when you have these folks talking about moving to places like Houston or Dallas, in an implied or entailed way they are talking about breaking that latency cartel. Honestly, just by stupid personal opinion, the SEC should grow the courage to ban low-latency based trading. This topic has been beat to death over the years, so I'm not adding anything to the discussion, just chiming in to say the obvious things... have a nice day.
- kasey_junk 2y ago
  These “folks” run their “Chicago” exchange out of NJ and this announcement has nothing to do with moving the matching engine.
- Galanwe 2y ago
  > Honestly, just by stupid personal opinion, the SEC should grow the courage to ban low-latency based trading. I think that's really just a matter of the media giving bad press to HFTs "because it's scary". The boring reality is that not much people care, and HFTs are really not that important on the grand scale of things. We're talking about maybe 4/5 firms worldwide making single to low double digits billions in P&L, from an activity that is most likely overall positive, or say net 0 if you're a bit cynical. Good for them.
  - tastyfreeze 2y ago
    > We're talking about maybe 4/5 firms worldwide making single to low double digits billions in P&L That is a fair amount of money being soaked up by a few firms. If low latency trading was banned real humans could compete for that money.
    - kasey_junk 2y ago
      We had that system, it was dominated by expensive pit traders and the spreads (the main cost driver for most people) were gigantic. This argument is precisely Luddite and a strange position for anyone on this particular forum.
      - steveBK123 2y ago
        No sure why this got downvoted, and I'm not sure what else people think "humans competing for that money" would look like? You're gonna need to physically collocate those people if you are trying to ban computers and latency based trading. Possibly in a "Pit" maybe in a building called an "Exchange" in places with a lot of financial services people like say NY or Chicago. Probably need to have some sort of membership/license requirement due to finite space. I dunno. Sounds like a novel concept that's never been tried.
        tastyfreeze 2y ago
        Before the internet? Things are a bit different now. HFT monopolized the market maker/arbitrage money with millisecond executions that nobody can compete with.
        steveBK123 2y ago
        You said "If low latency trading was banned real humans could compete for that money." As soon as you re-introduce distance, latency becomes a factor again. How do you eliminate "low latency trading" and prioritize "real humans" without putting them in the same room? What do you actually propose here? One way to reduce the impact of latency is to do away with continuous trading and move to frequent but discrete auctions. But this would just increase volatility. Imagine if every X minutes / hours stocks moved Y% like they do at market open, as all the information that was disseminated since the last auction was re-priced in. If anything the long term trend has been towards longer continuous trading sessions to reduce those types of jumps.
- dylan604 2y ago
  > the SEC should grow the courage In the current political environment, I don't see SEC (or any other gov't agency) growing courage anytime soon. Well, other than DOGE acting like an energy vampire growing stronger off of its victims.
  - jethro_tell 2y ago
    Yeah, the time to grow the courage to do the right thing was the last 4 years but seems on one could be bothered so now we are here
    - elzbardico 2y ago
      Too bad they used the last 4 years mostly to do the absurdly stupid wrong thing.
- atomicnumber3 2y ago
  Just for the record, the latency arb / microwave networks speed game is basically dead as of 2018-2021. Looks at Virtu, formerly classic examples of the trade and now almost entirely "switched sides" and doing order execution services for the same big banks whose lunch they were formerly eating. Furthermore, the wireless stuff is commoditized at this point. You can just rent to be on the wireless that Apsara (et al) offer, and while some have private networks, there's not enough money left in the trade (see above) to be worth it if you don't already have one. This is combined with liquidity moving away from public exchanges (both the lits and darks) towards being matched internally/by a partner (PFOF matching), which is purely a win for retail traders and is its own force that isn't going away. (Go on robinhood and buy 2 shares of SPY. It fills instantly. People love that. You can't just go get 2 shares of SPY off the lits, so where dyou think those are coming from?) Traditional HFT is dead. The only extent any of the firms are still alive is the extent to which they've moved on to other trades, many of which are so much less latency sensitive that the microwave edge doesn't really give you enough alpha to be worth it. (I worked for a firm for a long time that didnt move on to other trades... so I'm quite familiar with the scene.)
  - areyousure 2y ago
    > You can't just go get 2 shares of SPY off the lits, so where dyou think those are coming from? Why can't you just get 2 shares on an exchange?
    - ddulaney 2y ago
      Exchange trading happens in round lots that are usually 100 shares. This is pretty much just a legacy thing, but so many technical systems have this assumption built in that while odd-lot trading (trades not in the round lot size) has become a little more common on the exchanges, it’s still treated weirdly by the various systems involved. But also, it’s better for you as a retail investor, to get them from a middleman, because they will generally give you a better price than the exchange. They will give you a better price because retail traders tend on average to be worse at trading than the overall market. You should take advantage of that, regardless of your actual ability level.
Xen9 2y ago
Can you not use this information of it being closed for high frequency trading? Also I have pondered, to put it very simply, why wouldn't it be profitable, since the markets fluctuate, to gamble small amounts constantly at where they most often (this is more complex but you could simply draw line as well) cross a line, such that you can always lose everything, and then sell every time it goes over that line & buy when it's below regardless of how much you would make?
- witty_username 2y ago
  If we model the stock market as a random walk/Weiner process and I got the math right, I think you're almost certainly going to make money (if you stop when you reach a given profit threshold), but you will have arbitrarily large drawdowns. This is similar in terms of the risk/return profile to the martingale betting system. https://en.wikipedia.org/wiki/Martingale_(betting_system) https://en.wikipedia.org/wiki/Martingale_(betting_system)
  - Xen9 2y ago
    Oh yeah, I think in my head I confuse the size of the bet with the size of the ranges where it could be claimed to frequently cross the line between sell or buy (which I proposed would be what is most frequently crossed over), but in normal stock markets the market never hits the bottom. Compare this – real markets – to discrete signal between in [0.00,5.00] with smallest change being 0.25, and the market frequently going to zero or near zero, where know it often goes from [0.00, 1.75] to [2.25, 5.00]. In such case you wouldn't lose as heavily. So then markets can be roughly & informally modeled as what's the relationship between how much it somehow "often" changes vs. what's the risk cost, e.g. since normally stocks don't drop to zero constantly what's the bottom part in the traditional market graph that stays the same (it doesn't seem trivial to me what's the best way to consider what's often and what's the bottom part as the bottom part may change over time even if it most of time in real world remains constant, but I think the idea doesn't need one to know the exact alforhitm as yet to speak of values that if often crosses. So what, then is the exact information value of these candy bars of when the stock has not changed value? What do they tell us? And moreover, are they consistently valued, since the primary tail risk seems to be (probably, I am not expert) market crash, which means one would expect each to have the unchanging candy bar to relative to future performance, so that if we have a reasonable assumption of market crash probability, then some pattern should emerge & things should make sense? I believe it's trivial to formalize this point & honestly fruitless to not to figure it out, but I will post this comment & perhaps later on return to this. To me the primary here is that the candy bar is what matters, and that if any markets like my [0.00, 5.00] market exist, my strategy would be profitable in those. Moreover, I think in trading strategy the idea that one wants to guess how fast they can cross the threshold to not to lose, to be able to "Martingale" as you out it is valuable & kellyable.

parasense 2y ago

You did raise a good point about latency sensitive brokers, and I feel like that is becoming a self-selecting cartel based around the NY/NJ area. So when you have these folks talking about moving to places like Houston or Dallas, in an implied or entailed way they are talking about breaking that latency cartel. Honestly, just by stupid personal opinion, the SEC should grow the courage to ban low-latency based trading. This topic has been beat to death over the years, so I'm not adding anything to the discussion, just chiming in to say the obvious things... have a nice day.

kasey_junk 2y ago
These “folks” run their “Chicago” exchange out of NJ and this announcement has nothing to do with moving the matching engine.
Galanwe 2y ago
> Honestly, just by stupid personal opinion, the SEC should grow the courage to ban low-latency based trading. I think that's really just a matter of the media giving bad press to HFTs "because it's scary". The boring reality is that not much people care, and HFTs are really not that important on the grand scale of things. We're talking about maybe 4/5 firms worldwide making single to low double digits billions in P&L, from an activity that is most likely overall positive, or say net 0 if you're a bit cynical. Good for them.
- tastyfreeze 2y ago
  > We're talking about maybe 4/5 firms worldwide making single to low double digits billions in P&L That is a fair amount of money being soaked up by a few firms. If low latency trading was banned real humans could compete for that money.
  - kasey_junk 2y ago
    We had that system, it was dominated by expensive pit traders and the spreads (the main cost driver for most people) were gigantic. This argument is precisely Luddite and a strange position for anyone on this particular forum.
    - steveBK123 2y ago
      No sure why this got downvoted, and I'm not sure what else people think "humans competing for that money" would look like? You're gonna need to physically collocate those people if you are trying to ban computers and latency based trading. Possibly in a "Pit" maybe in a building called an "Exchange" in places with a lot of financial services people like say NY or Chicago. Probably need to have some sort of membership/license requirement due to finite space. I dunno. Sounds like a novel concept that's never been tried.
      - tastyfreeze 2y ago
        Before the internet? Things are a bit different now. HFT monopolized the market maker/arbitrage money with millisecond executions that nobody can compete with.
        steveBK123 2y ago
        You said "If low latency trading was banned real humans could compete for that money." As soon as you re-introduce distance, latency becomes a factor again. How do you eliminate "low latency trading" and prioritize "real humans" without putting them in the same room? What do you actually propose here? One way to reduce the impact of latency is to do away with continuous trading and move to frequent but discrete auctions. But this would just increase volatility. Imagine if every X minutes / hours stocks moved Y% like they do at market open, as all the information that was disseminated since the last auction was re-priced in. If anything the long term trend has been towards longer continuous trading sessions to reduce those types of jumps.
dylan604 2y ago
> the SEC should grow the courage In the current political environment, I don't see SEC (or any other gov't agency) growing courage anytime soon. Well, other than DOGE acting like an energy vampire growing stronger off of its victims.
- jethro_tell 2y ago
  Yeah, the time to grow the courage to do the right thing was the last 4 years but seems on one could be bothered so now we are here
  - elzbardico 2y ago
    Too bad they used the last 4 years mostly to do the absurdly stupid wrong thing.
atomicnumber3 2y ago
Just for the record, the latency arb / microwave networks speed game is basically dead as of 2018-2021. Looks at Virtu, formerly classic examples of the trade and now almost entirely "switched sides" and doing order execution services for the same big banks whose lunch they were formerly eating. Furthermore, the wireless stuff is commoditized at this point. You can just rent to be on the wireless that Apsara (et al) offer, and while some have private networks, there's not enough money left in the trade (see above) to be worth it if you don't already have one. This is combined with liquidity moving away from public exchanges (both the lits and darks) towards being matched internally/by a partner (PFOF matching), which is purely a win for retail traders and is its own force that isn't going away. (Go on robinhood and buy 2 shares of SPY. It fills instantly. People love that. You can't just go get 2 shares of SPY off the lits, so where dyou think those are coming from?) Traditional HFT is dead. The only extent any of the firms are still alive is the extent to which they've moved on to other trades, many of which are so much less latency sensitive that the microwave edge doesn't really give you enough alpha to be worth it. (I worked for a firm for a long time that didnt move on to other trades... so I'm quite familiar with the scene.)
- areyousure 2y ago
  > You can't just go get 2 shares of SPY off the lits, so where dyou think those are coming from? Why can't you just get 2 shares on an exchange?
  - ddulaney 2y ago
    Exchange trading happens in round lots that are usually 100 shares. This is pretty much just a legacy thing, but so many technical systems have this assumption built in that while odd-lot trading (trades not in the round lot size) has become a little more common on the exchanges, it’s still treated weirdly by the various systems involved. But also, it’s better for you as a retail investor, to get them from a middleman, because they will generally give you a better price than the exchange. They will give you a better price because retail traders tend on average to be worse at trading than the overall market. You should take advantage of that, regardless of your actual ability level.

Xen9 2y ago

Can you not use this information of it being closed for high frequency trading? Also I have pondered, to put it very simply, why wouldn't it be profitable, since the markets fluctuate, to gamble small amounts constantly at where they most often (this is more complex but you could simply draw line as well) cross a line, such that you can always lose everything, and then sell every time it goes over that line & buy when it's below regardless of how much you would make?

witty_username 2y ago
If we model the stock market as a random walk/Weiner process and I got the math right, I think you're almost certainly going to make money (if you stop when you reach a given profit threshold), but you will have arbitrarily large drawdowns. This is similar in terms of the risk/return profile to the martingale betting system. https://en.wikipedia.org/wiki/Martingale_(betting_system) https://en.wikipedia.org/wiki/Martingale_(betting_system)
- Xen9 2y ago
  Oh yeah, I think in my head I confuse the size of the bet with the size of the ranges where it could be claimed to frequently cross the line between sell or buy (which I proposed would be what is most frequently crossed over), but in normal stock markets the market never hits the bottom. Compare this – real markets – to discrete signal between in [0.00,5.00] with smallest change being 0.25, and the market frequently going to zero or near zero, where know it often goes from [0.00, 1.75] to [2.25, 5.00]. In such case you wouldn't lose as heavily. So then markets can be roughly & informally modeled as what's the relationship between how much it somehow "often" changes vs. what's the risk cost, e.g. since normally stocks don't drop to zero constantly what's the bottom part in the traditional market graph that stays the same (it doesn't seem trivial to me what's the best way to consider what's often and what's the bottom part as the bottom part may change over time even if it most of time in real world remains constant, but I think the idea doesn't need one to know the exact alforhitm as yet to speak of values that if often crosses. So what, then is the exact information value of these candy bars of when the stock has not changed value? What do they tell us? And moreover, are they consistently valued, since the primary tail risk seems to be (probably, I am not expert) market crash, which means one would expect each to have the unchanging candy bar to relative to future performance, so that if we have a reasonable assumption of market crash probability, then some pattern should emerge & things should make sense? I believe it's trivial to formalize this point & honestly fruitless to not to figure it out, but I will post this comment & perhaps later on return to this. To me the primary here is that the candy bar is what matters, and that if any markets like my [0.00, 5.00] market exist, my strategy would be profitable in those. Moreover, I think in trading strategy the idea that one wants to guess how fast they can cross the threshold to not to lose, to be able to "Martingale" as you out it is valuable & kellyable.