4 ms·

If you are a market participant, you benefit from tighter spreads. If you "regulate HFT out of existence," you will instead get to buy higher and sell lower.

• beagle3 14y ago
  Not necessarily. While it makes the spreads tighter for market orders, you could put a limit order in the middle of a larger spread and are likely to be matched. If you join the bid or the offer (and are satisfied), you'll actually buy lower and sell higher! So the real answer is: "If you are more patient, or smarter, you will pay less. If you are impatient or dumb, you will pay more.". And of course all of this ONLY applies to the most liquid 500 symbols or so, which are the HFT playground.
  • anonymoushn 14y ago
    I was assuming that the desired course of action was to enter or exit a position, rather than to enter or exit a position with moderately high probability.
    • beagle3 14y ago
      Generally, the HFT player provides "impatience service" - they give you immediate execution, and charge you a fee for it. Unfortunately, since they invest in speed, they impose this service fee on everyone: When you join the bid or the offer, you are always behind the HFT player, and as a result you will only execute if there is a huge execution, or, (more probably) if the price moves against you. This aspect of HFT is completely fair, btw - the HFT players are taking a risk, and they should be rewarded for it. The part that is unfair is described very well by nanex in this thread - go read it.