7 ms·

While i find the technological challenges in HFT very exciting, i would never want to work for the companies benefitting from that work. If that means i will ma

by kayoone 13y ago

While i find the technological challenges in HFT very exciting, i would never want to work for the companies benefitting from that work. If that means i will make less money and someone else will come in and do it, then so be it.

vasilipupkin 13y ago
That should exclude most hardware vendors, since they benefit from high frequency traders buying up tons of hardware
CmonDev 13y ago
Check if your company invests (e.g. your pension pot) into one of the portfolios that sub-allocates to HTF hedge fund as well. You might want to pull out then. So immoral.
- kaeawc 13y ago
  Maybe they already have.
theorique 13y ago
why?
- allochthon 13y ago
  In my mind, the value that HFT adds is theoretical at best. The Economist could surely rationalize it in terms of "finding the right prices" or "arbitrage" or something. To me it looks like a systematic way of taking advantage of people who aren't using it.
  - theorique 13y ago
    Would it make more sense to look at it as similar to a poker game? Relatively little economic value is created or destroyed in ultra-short time scales, so the players in that game are essentially playing against each other (minus some small cut taken by the casino). The ‘good’ players thrive until they reach maximum size for their niche. The ‘bad’ players leave the business. Customers such as long term investors, institutional money, etc, benefit through narrowed spreads and reduced transaction costs. You could call it a vicious, dog-eat-dog business, but the dogs aren’t really a threat to anybody else.
    - allochthon 13y ago
      Interesting way of looking at it. I hadn't thought of it that way before. I'm curious how sound this analogy is.
gaius 13y ago
There is a thing in most kinds of investing and trading called slippage. This is when you decide you want to buy something at say $100/unit but by the time your order reaches the market, the price has moved, maybe it's $101, maybe it's $99. If you are buying a lot, then it's unlikely there's a single counterparty you can trade with, so you will actually be doing it as many smaller trades. Sometimes slippage moves for you, sometimes against but that's not the kind of trading you want to do because it involves taking on more risk, you want confidence that the price you ask for is the price you're going to get, and you don't want your trades to affect the price. HFT techniques are invaluable here.
- ksk 13y ago
  If you want to adopt a pro-HFT position, can you point to a single major market volatility event when the insanely risk-averse HFT algorithms, didn't just shutdown? I've looked, I haven't found any. Would be nice if they did exist as it would invalidate some of the HFT criticism.
  - gaius 13y ago
    We're not talking about major events, we're just talking about everyday normal trading. My entire point is that HFT is valuable for reducing risk for this kind of work, you say "risk-averse" like it's a bad thing... It's not a case, btw, of being pro- or anti-. HFT is just a tool. You can use any tool in any way, it doesn't care because it has no moral agency of its own.
    - ksk 13y ago
      >My entire point is that HFT is valuable for reducing risk for this kind of work, you say "risk-averse" like it's a bad thing... Er.. One of the fundamental reasons that HFT exists is increased market liquidity. Re-read what you wrote. You imply HFTs reduce risk and at the same time seem to accept that they are risk-averse - ergo unable to reduce risk as they shutdown when the markets risk profile increases. So which is it? Oh and btw, since no humans trade securities at such a high frequency, The HFT trading that takes up such a sizeable portion of the total pie, is just an electronic game being played between two competing firms. So, even if they did reduce risk, it would not help human participants.
mathattack 13y ago
This is a very strong statement. It means you wouldn't want to work for any of the software or hardware firms that supply them. Eliminate Microsoft, IBM, Oracle, and most networking and big data providers from your list. Eliminate all financial services firms who make either commissions on the other sides of the trades with them, or get better bid-offer spreads as a result. They're not saints, but it's very hard to remove oneself from where they have impact.
- kaeawc 13y ago
  There are quite a lot of companies out there, I don't see how it would be so hard.
- kayoone 13y ago
  I dont think one has to go all the way into avoiding everything and anyone associated with these businesses for it to have a positive impact. But you could at least try to not work directly for them. Likewise, I am also very concerned about the sustainability of the human culture in general, still i dont stop eating meat completely or stop driving my car. But i will try to balance things and reflect my consumption patterns on a regular basis. Sorry, i am not a native english speaker and can not really word this in the way i want, but well, you might get the idea ;)
  - mathattack 13y ago
    Your English is more than strong enough to get the point across. I agree with you - we do what we can on the margins. It's tough to take overly absolute positions. That's what I was calling out in my post.
kristoffer 13y ago
I have less problems with HFT than ad driven businesses (e.g. Google and Facebook), military stuff, banking in general ...

by kayoone 13y ago

vasilipupkin 13y ago

That should exclude most hardware vendors, since they benefit from high frequency traders buying up tons of hardware

CmonDev 13y ago

Check if your company invests (e.g. your pension pot) into one of the portfolios that sub-allocates to HTF hedge fund as well. You might want to pull out then. So immoral.

kaeawc 13y ago
Maybe they already have.

theorique 13y ago

why?

allochthon 13y ago
In my mind, the value that HFT adds is theoretical at best. The Economist could surely rationalize it in terms of "finding the right prices" or "arbitrage" or something. To me it looks like a systematic way of taking advantage of people who aren't using it.
- theorique 13y ago
  Would it make more sense to look at it as similar to a poker game? Relatively little economic value is created or destroyed in ultra-short time scales, so the players in that game are essentially playing against each other (minus some small cut taken by the casino). The ‘good’ players thrive until they reach maximum size for their niche. The ‘bad’ players leave the business. Customers such as long term investors, institutional money, etc, benefit through narrowed spreads and reduced transaction costs. You could call it a vicious, dog-eat-dog business, but the dogs aren’t really a threat to anybody else.
  - allochthon 13y ago
    Interesting way of looking at it. I hadn't thought of it that way before. I'm curious how sound this analogy is.

gaius 13y ago

There is a thing in most kinds of investing and trading called slippage. This is when you decide you want to buy something at say $100/unit but by the time your order reaches the market, the price has moved, maybe it's $101, maybe it's $99. If you are buying a lot, then it's unlikely there's a single counterparty you can trade with, so you will actually be doing it as many smaller trades. Sometimes slippage moves for you, sometimes against but that's not the kind of trading you want to do because it involves taking on more risk, you want confidence that the price you ask for is the price you're going to get, and you don't want your trades to affect the price. HFT techniques are invaluable here.

ksk 13y ago
If you want to adopt a pro-HFT position, can you point to a single major market volatility event when the insanely risk-averse HFT algorithms, didn't just shutdown? I've looked, I haven't found any. Would be nice if they did exist as it would invalidate some of the HFT criticism.
- gaius 13y ago
  We're not talking about major events, we're just talking about everyday normal trading. My entire point is that HFT is valuable for reducing risk for this kind of work, you say "risk-averse" like it's a bad thing... It's not a case, btw, of being pro- or anti-. HFT is just a tool. You can use any tool in any way, it doesn't care because it has no moral agency of its own.
  - ksk 13y ago
    >My entire point is that HFT is valuable for reducing risk for this kind of work, you say "risk-averse" like it's a bad thing... Er.. One of the fundamental reasons that HFT exists is increased market liquidity. Re-read what you wrote. You imply HFTs reduce risk and at the same time seem to accept that they are risk-averse - ergo unable to reduce risk as they shutdown when the markets risk profile increases. So which is it? Oh and btw, since no humans trade securities at such a high frequency, The HFT trading that takes up such a sizeable portion of the total pie, is just an electronic game being played between two competing firms. So, even if they did reduce risk, it would not help human participants.

mathattack 13y ago

This is a very strong statement. It means you wouldn't want to work for any of the software or hardware firms that supply them. Eliminate Microsoft, IBM, Oracle, and most networking and big data providers from your list. Eliminate all financial services firms who make either commissions on the other sides of the trades with them, or get better bid-offer spreads as a result. They're not saints, but it's very hard to remove oneself from where they have impact.

kaeawc 13y ago
There are quite a lot of companies out there, I don't see how it would be so hard.
kayoone 13y ago
I dont think one has to go all the way into avoiding everything and anyone associated with these businesses for it to have a positive impact. But you could at least try to not work directly for them. Likewise, I am also very concerned about the sustainability of the human culture in general, still i dont stop eating meat completely or stop driving my car. But i will try to balance things and reflect my consumption patterns on a regular basis. Sorry, i am not a native english speaker and can not really word this in the way i want, but well, you might get the idea ;)
- mathattack 13y ago
  Your English is more than strong enough to get the point across. I agree with you - we do what we can on the margins. It's tough to take overly absolute positions. That's what I was calling out in my post.

kristoffer 13y ago

I have less problems with HFT than ad driven businesses (e.g. Google and Facebook), military stuff, banking in general ...