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HFT, brokerage houses, and wall street in general is about providing the service of being a middle man and profiting from standing in the middle of a transactio

HFT, brokerage houses, and wall street in general is about providing the service of being a middle man and profiting from standing in the middle of a transaction. Traders via automated machines or human beings facilitate a transaction between a buyer and a seller. That's the business. It's not about providing capital or whatever else people think it is, it's about being basically a sales agent. Before computers, Wall St. was still largely about trading and standing between people who have money and people are willing to trade ownership for money. That's it. The problem is that HFT is about profiting on even the smallest trades, but cranking up the volume to 11. It's kind of like what Wal-Mart did to retail, they make less money per item, but they literally make it up in volume. Algorithmic trading can be slow or fast, but it plays off the fact that machines can compute the data and make a decision faster than humans can, especially on a digital marketplace. It is unfair to human traders, sure. But, you have a digital trading platform, so at some point it's impossible to stop algorithmic trading. If you want a market where the purpose is to create capital for businesses without dealing with machine trading, you need to start a new market that is not run by machines and is only operated by human, person to person trades.

drawkbox 14y ago
I am not usually a fan of regulation but his 10c tax for trades in less than an hour may help this out big time. It really is just like API throttling so people or consumers don't abuse the systems for all. Then again day trading and hedging is a big part of investment portfolios now and this would change things big time. Whether its through a use of taxes on trades(hit every trade on a stock held less than 1 hour with a 10c tax and all these problems go away), or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 1 year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years. There are probably some edge cases where a time based tax would be a problem but for the most part I think it would drastically reduce the HFT skimming. Then again, if you are making money on the market you are probably doing the skimming. A big problem for markets is weak or too many short term investors, they can create a snowball effect. HFT trading algorithms are very short and can create flash crash windfalls. Luckily they can also buy up when those things happen and the whole thing is over in a blink but that seems too risky. What happens when all the trades are by HFT algorithms? Eventually if those make all the money then everyone will use them all the time. Where are the long suckers then?

drawkbox 14y ago

I am not usually a fan of regulation but his 10c tax for trades in less than an hour may help this out big time. It really is just like API throttling so people or consumers don't abuse the systems for all. Then again day trading and hedging is a big part of investment portfolios now and this would change things big time. Whether its through a use of taxes on trades(hit every trade on a stock held less than 1 hour with a 10c tax and all these problems go away), or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 1 year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years. There are probably some edge cases where a time based tax would be a problem but for the most part I think it would drastically reduce the HFT skimming. Then again, if you are making money on the market you are probably doing the skimming. A big problem for markets is weak or too many short term investors, they can create a snowball effect. HFT trading algorithms are very short and can create flash crash windfalls. Luckily they can also buy up when those things happen and the whole thing is over in a blink but that seems too risky. What happens when all the trades are by HFT algorithms? Eventually if those make all the money then everyone will use them all the time. Where are the long suckers then?