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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 shutd

by 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.
  - gaius 13y ago
    You are conflating market risk with counterparty/exchange risk there. Wikipaedia is your friend...
    - ksk 13y ago
      OK, we're arguing two different things. My one and only point is HFTs shut-shop at the slightest sign of risk, leaving you to trade at massive losses - precisely because there are no HFT like counterparties ready to buy/sell inventory. IIUC Your position seems to be that HFTs amongst themselves can allow for an order execution strategy of breaking up the order into chunks to discount for the price change that occurs when you increase supply of a security while selling it. If that is your position then I withdraw my protest because I agree with it.
wglb 13y ago
The flash crash was one major one. Some of the HFT firms bailed out, some (the market makers) were required by their contracts with the exchanges to stay in. One reference: http://www.advfn.com/nasdaq/StockNews.asp?stocknews=CME&article=42714334 http://www.advfn.com/nasdaq/StockNews.asp?stocknews=CME&arti... I've looked, Where did you look? That is kind of a big one to miss.
- ksk 13y ago
  Hey, thanks for supporting my point.

by ksk 13y ago

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.
- gaius 13y ago
  You are conflating market risk with counterparty/exchange risk there. Wikipaedia is your friend...
  - ksk 13y ago
    OK, we're arguing two different things. My one and only point is HFTs shut-shop at the slightest sign of risk, leaving you to trade at massive losses - precisely because there are no HFT like counterparties ready to buy/sell inventory. IIUC Your position seems to be that HFTs amongst themselves can allow for an order execution strategy of breaking up the order into chunks to discount for the price change that occurs when you increase supply of a security while selling it. If that is your position then I withdraw my protest because I agree with it.

wglb 13y ago

The flash crash was one major one. Some of the HFT firms bailed out, some (the market makers) were required by their contracts with the exchanges to stay in. One reference: http://www.advfn.com/nasdaq/StockNews.asp?stocknews=CME&article=42714334 http://www.advfn.com/nasdaq/StockNews.asp?stocknews=CME&arti... I've looked, Where did you look? That is kind of a big one to miss.

ksk 13y ago
Hey, thanks for supporting my point.