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Can we have a different kind of stock market which forces participants to consider long term outcomes more? E.g. no HFT firm should be able to make a profit fro

Can we have a different kind of stock market which forces participants to consider long term outcomes more? E.g. no HFT firm should be able to make a profit from such a stock market. Selling stocks earlier and often should result in a penalty or percentage being taken away as a fee. As a retail investor I would love to use invest and forget strategy based on trends observed in such a stock market.

callc 2y ago
Consider no stock market. Just keep the company private. Honest question, why do so many companies strive to go public?
- mistercheph 2y ago
  Access to large pool of capital
- nthingtohide 2y ago
  There are other places where people can gamble
gruez 2y ago
>E.g. no HFT firm should be able to make a profit from such a stock market. Selling stocks earlier and often should result in a penalty or percentage being taken away as a fee. Maybe by "HFT" you only mean "those evil hedge funds that are pushing companies to chase next quarters' earnings", but there's nothing fundamentally wrong with high frequency trading. Market making[1] is high frequency trading, and basically involves offering to both buy and sell and given stock, and pocketing the spread. That increases liquidity, making it easier for other traders to buy/sell stock without taking a huge loss. It's unclear why you'd want to ban this, or how you'd distinguish this from whatever evil HFT you actually want to ban. [1] https://en.wikipedia.org/wiki/Market_maker https://en.wikipedia.org/wiki/Market_maker
- nthingtohide 2y ago
  I am not saying HFTs can't sell but there should be penalty for higher frequency. It means they have to craft algorithms which will take longer term view of stocks (and their fundamentals) rather than ignorance of other participants
  - gruez 2y ago
    Market makers make fractions of a percent per trade. How will your "penalty for higher frequency" deter traders that prey on "ignorance of other participants" or whatever, but don't put market makers out of business?
    - mistercheph 2y ago
      Easy, bye market makers! It's like a layoff, some good will end up getting culled with the bad.
      - deleted 2y ago
        [deleted]
      - disgruntledphd2 2y ago
        Unfortunately, if you don't have people to make a market, it's not going to be a very good market for a bunch of important values of good.
- nthingtohide 2y ago
  All these HFT stuff reminds me of chinese event where people send each other gift money as a good will gesture. Revenue is high but no meaningful transaction has happened. The money is just being exchanged between the same top HFT firms. And the best of our minds are fighting it out in the arena of algorithms rather than creating real world value.
  - gruez 2y ago
    >Revenue is high but no meaningful transaction has happened. The money is just being exchanged between the same top HFT firms. And the best of our minds are fighting it out in the arena of algorithms rather than creating real world value. Liquidity is "real world value". Being able to buy/sell a stock instantly without a massive premium/discount makes stock ownership for the average person possible. Contrast this to an liquid market, like buying houses, where you need to spend months house hunting, and pay a 6% commission on top.
thijson 2y ago
It's not really high frequency trading in the sense of day trading, it's a bit of a misnomer. I would say it's actually low latency trading, the number of trades isn't huge. It ensures that linkages in the market operate quickly. Linkages between a stock price and its respective options. Or linkages between an index ETF and its components. The price discovery process should be fast, it benefits all of the market participants.
- dleeftink 2y ago
  Benefits how? Even if we are all 'market participants', the time investment between a hobbyist and career investor is rarely equal. An LFT/low frequency trading market would egalise this discrepancy.
- nthingtohide 2y ago
  https://www.ecb.europa.eu/press/research-publications/resbull/2020/html/ecb.rb201215~210477c6b0.en.html https://www.ecb.europa.eu/press/research-publications/resbul... High-frequency traders (HFTs) are market participants that are characterised by the high speed with which they react to incoming news, the low inventory on their books, and the large number of trades they execute. All this is possible for HFTs because they use automated, algorithmic trading, which enables them to analyse markets and execute trades in under a millisecond. The high-frequency trading industry grew rapidly after it took off in the mid-2000s. Today, high-frequency trading represents about 50% of trading volume in US equity markets. In European equity markets, its share is estimated to be between 24% and 43% of trading volume, and about 58% to 76% of orders.
DebtDeflation 2y ago
>forces participants to consider long term outcomes more I remember many years ago telling a senior executive that I had concerns that some of the steps we were taking to boost current quarter financials would negatively impact business performance in the long term. He just chuckled and said, "there's no such thing as the long term, only a never ending series of current quarters".
astrange 2y ago
This subthread is nonsense. As a retail investor, HFT is good for you and lowers your prices. They have a bad reputation because of the book Flash Boys… but basically nothing in that book was true.

callc 2y ago

Consider no stock market. Just keep the company private. Honest question, why do so many companies strive to go public?

mistercheph 2y ago
Access to large pool of capital
nthingtohide 2y ago
There are other places where people can gamble

gruez 2y ago

>E.g. no HFT firm should be able to make a profit from such a stock market. Selling stocks earlier and often should result in a penalty or percentage being taken away as a fee. Maybe by "HFT" you only mean "those evil hedge funds that are pushing companies to chase next quarters' earnings", but there's nothing fundamentally wrong with high frequency trading. Market making[1] is high frequency trading, and basically involves offering to both buy and sell and given stock, and pocketing the spread. That increases liquidity, making it easier for other traders to buy/sell stock without taking a huge loss. It's unclear why you'd want to ban this, or how you'd distinguish this from whatever evil HFT you actually want to ban. [1] https://en.wikipedia.org/wiki/Market_maker https://en.wikipedia.org/wiki/Market_maker

nthingtohide 2y ago
I am not saying HFTs can't sell but there should be penalty for higher frequency. It means they have to craft algorithms which will take longer term view of stocks (and their fundamentals) rather than ignorance of other participants
- gruez 2y ago
  Market makers make fractions of a percent per trade. How will your "penalty for higher frequency" deter traders that prey on "ignorance of other participants" or whatever, but don't put market makers out of business?
  - mistercheph 2y ago
    Easy, bye market makers! It's like a layoff, some good will end up getting culled with the bad.
    - deleted 2y ago
      [deleted]
    - disgruntledphd2 2y ago
      Unfortunately, if you don't have people to make a market, it's not going to be a very good market for a bunch of important values of good.
nthingtohide 2y ago
All these HFT stuff reminds me of chinese event where people send each other gift money as a good will gesture. Revenue is high but no meaningful transaction has happened. The money is just being exchanged between the same top HFT firms. And the best of our minds are fighting it out in the arena of algorithms rather than creating real world value.
- gruez 2y ago
  >Revenue is high but no meaningful transaction has happened. The money is just being exchanged between the same top HFT firms. And the best of our minds are fighting it out in the arena of algorithms rather than creating real world value. Liquidity is "real world value". Being able to buy/sell a stock instantly without a massive premium/discount makes stock ownership for the average person possible. Contrast this to an liquid market, like buying houses, where you need to spend months house hunting, and pay a 6% commission on top.

thijson 2y ago

It's not really high frequency trading in the sense of day trading, it's a bit of a misnomer. I would say it's actually low latency trading, the number of trades isn't huge. It ensures that linkages in the market operate quickly. Linkages between a stock price and its respective options. Or linkages between an index ETF and its components. The price discovery process should be fast, it benefits all of the market participants.

dleeftink 2y ago
Benefits how? Even if we are all 'market participants', the time investment between a hobbyist and career investor is rarely equal. An LFT/low frequency trading market would egalise this discrepancy.
nthingtohide 2y ago
https://www.ecb.europa.eu/press/research-publications/resbull/2020/html/ecb.rb201215~210477c6b0.en.html https://www.ecb.europa.eu/press/research-publications/resbul... High-frequency traders (HFTs) are market participants that are characterised by the high speed with which they react to incoming news, the low inventory on their books, and the large number of trades they execute. All this is possible for HFTs because they use automated, algorithmic trading, which enables them to analyse markets and execute trades in under a millisecond. The high-frequency trading industry grew rapidly after it took off in the mid-2000s. Today, high-frequency trading represents about 50% of trading volume in US equity markets. In European equity markets, its share is estimated to be between 24% and 43% of trading volume, and about 58% to 76% of orders.

DebtDeflation 2y ago

>forces participants to consider long term outcomes more I remember many years ago telling a senior executive that I had concerns that some of the steps we were taking to boost current quarter financials would negatively impact business performance in the long term. He just chuckled and said, "there's no such thing as the long term, only a never ending series of current quarters".

astrange 2y ago

This subthread is nonsense. As a retail investor, HFT is good for you and lowers your prices. They have a bad reputation because of the book Flash Boys… but basically nothing in that book was true.