3 ms·

It's more nuanced than that. There are things like patents and copyrights. When it suits them, big C capitalists demand longer trading terms, then turn around a

It's more nuanced than that. There are things like patents and copyrights. When it suits them, big C capitalists demand longer trading terms, then turn around and say the opposite when it comes to HFT (shorter trading terms). (They also do this with their accredited investor requirements). HFT harms society because it cuts off the number of investors that can do active trading. It's net effect is the same as regulations the keep out entrepreneurs from innovating in things like health care and drones and car manufacturing.

AJ007 14y ago
How does having a greater number of investors doing "active trading" (which I assume means day trading) make society better off than having fewer? By this same logic society was better off having more people employed over turning dirt by hand in fields..
- marshallp 14y ago
  (I mean trading in daily/weekly - not intra-day) Concentrating trading in a few hands is the problem we had - too big to fail. HFT will lead to barriers to new entrants (because of increasing startup costs).
  - Permit 14y ago
    >Concentrating trading in a few hands is the problem we had - too big to fail No. You're confusing things. High frequency trading had nothing to do with financial bailouts. To my knowledge, no high frequency trading shop has ever been bailed out or deemed too big to fail. >HFT will lead to barriers to new entrants (because of increasing startup costs). Please explain this, how does HFT increase startup costs? I'm not sure who you think benefits the most out of high frequency trading, but it's not huge banks like Goldman Sachs. My understanding is that the best high frequency shops are relatively small. They're made up of a mix of programmer and quants, not traditional investment bankers.
    - marshallp 14y ago
      I'm not confusing anything. Yes the previous crash wasn't HFT but current trends will lead to the already rich (the banks) being the HFT's because the land surrounding the exchange is limited and costs will increase (HFT is about land and computer resources, and high speed networks - new models don't factor in as much). It won't be programmers calling the shots, they'll be employed by the banks. Already, the average geek is outgunned (overall competitiveness has decreased).
      - iwejfweoifjweif 14y ago
        How do you figure the average geek is outgunned? There are multitudes of small HFT shops staffed mainly by geeks in Manhattan doing pretty well. HFT tends not to be profitable enough for banks to bother with, especially if you have to pay most of your profits to the programmers behind it so they don't leave and do it themselves.
        marshallp 14y ago
        There's been plenty of discussions on HN about getting into HFT and the advice given is that it's too expensive for the average guy.
  - yummyfajitas 14y ago
    HFT is the result of barriers to entry falling. Any software engineer can save money for a couple of years and start an HFT shop.
confluence 14y ago
Yeah because retail investors should do more with their money - not. There's a reason these industries are hard and should be hard - these are serious industries with serious consequences. Health care - screw it up and you kill someone. Drones - screw it up and you kill someone. Cars - screw it up and you kill someone. Finance - screw it up and you lose the retirement savings of your investors. These are not games to be played by unsophisticated people or green entrepreneurs. This does not mean that the extant incumbents are any good - it merely means that new players does not automatically confer innovation goodness (see natural monopolies/booms).
- marshallp 14y ago
  The argument you're making is in favor of my argument of regulating HFT (I want a limit to daily or weekly trade, others want more taxation). As to regulation on healthcare/drones/cars etc. things aren't perfect, that's all I'm saying. I think things are too restrictive right now, I'm not arguing for abolition of all regulations. edit: Yes, retail investors should be trading more. That's the idea behind the recent rise in crowdfunding. Innovation happens a lot faster in small c capitalism than in big C capitalism.
  - confluence 14y ago
    Crowdfunding will be the core of the next tech bubble peaking ~2016-2018 - run on afterburner with the success of product pre-purchase launches (irrelevant to investment), the aggressive lobbying of VCs, the credulity/unsophistication of most investors and the passing of the JOBS act combined with the cycling of alpha searching global credit saturating the niche industry known as Silicon Valley. But I'll gladly take part and take people's money while the times are good. I don't particularly care either way - I make money no matter what the market.
  - Evbn 14y ago
    Your persistent mistake is in confusing trading with investing.
    - marshallp 14y ago

AJ007 14y ago

How does having a greater number of investors doing "active trading" (which I assume means day trading) make society better off than having fewer? By this same logic society was better off having more people employed over turning dirt by hand in fields..

marshallp 14y ago
(I mean trading in daily/weekly - not intra-day) Concentrating trading in a few hands is the problem we had - too big to fail. HFT will lead to barriers to new entrants (because of increasing startup costs).
- Permit 14y ago
  >Concentrating trading in a few hands is the problem we had - too big to fail No. You're confusing things. High frequency trading had nothing to do with financial bailouts. To my knowledge, no high frequency trading shop has ever been bailed out or deemed too big to fail. >HFT will lead to barriers to new entrants (because of increasing startup costs). Please explain this, how does HFT increase startup costs? I'm not sure who you think benefits the most out of high frequency trading, but it's not huge banks like Goldman Sachs. My understanding is that the best high frequency shops are relatively small. They're made up of a mix of programmer and quants, not traditional investment bankers.
  - marshallp 14y ago
    I'm not confusing anything. Yes the previous crash wasn't HFT but current trends will lead to the already rich (the banks) being the HFT's because the land surrounding the exchange is limited and costs will increase (HFT is about land and computer resources, and high speed networks - new models don't factor in as much). It won't be programmers calling the shots, they'll be employed by the banks. Already, the average geek is outgunned (overall competitiveness has decreased).
    - iwejfweoifjweif 14y ago
      How do you figure the average geek is outgunned? There are multitudes of small HFT shops staffed mainly by geeks in Manhattan doing pretty well. HFT tends not to be profitable enough for banks to bother with, especially if you have to pay most of your profits to the programmers behind it so they don't leave and do it themselves.
      - marshallp 14y ago
        There's been plenty of discussions on HN about getting into HFT and the advice given is that it's too expensive for the average guy.
- yummyfajitas 14y ago
  HFT is the result of barriers to entry falling. Any software engineer can save money for a couple of years and start an HFT shop.

confluence 14y ago

Yeah because retail investors should do more with their money - not. There's a reason these industries are hard and should be hard - these are serious industries with serious consequences. Health care - screw it up and you kill someone. Drones - screw it up and you kill someone. Cars - screw it up and you kill someone. Finance - screw it up and you lose the retirement savings of your investors. These are not games to be played by unsophisticated people or green entrepreneurs. This does not mean that the extant incumbents are any good - it merely means that new players does not automatically confer innovation goodness (see natural monopolies/booms).

marshallp 14y ago
The argument you're making is in favor of my argument of regulating HFT (I want a limit to daily or weekly trade, others want more taxation). As to regulation on healthcare/drones/cars etc. things aren't perfect, that's all I'm saying. I think things are too restrictive right now, I'm not arguing for abolition of all regulations. edit: Yes, retail investors should be trading more. That's the idea behind the recent rise in crowdfunding. Innovation happens a lot faster in small c capitalism than in big C capitalism.
- confluence 14y ago
  Crowdfunding will be the core of the next tech bubble peaking ~2016-2018 - run on afterburner with the success of product pre-purchase launches (irrelevant to investment), the aggressive lobbying of VCs, the credulity/unsophistication of most investors and the passing of the JOBS act combined with the cycling of alpha searching global credit saturating the niche industry known as Silicon Valley. But I'll gladly take part and take people's money while the times are good. I don't particularly care either way - I make money no matter what the market.
- Evbn 14y ago
  Your persistent mistake is in confusing trading with investing.
  - marshallp 14y ago