3 ms·
Indeed, this is a bit of a non-story. Lower volume customers have lower fixed costs, they generally get much worse quotes (higher spreads) too. The fact is wh
by TheAnimus 13y ago
Indeed, this is a bit of a non-story.
Lower volume customers have lower fixed costs, they generally get much worse quotes (higher spreads) too. The fact is whilst $56k might sound like a lot to some person day trader, it is nothing compared to the actual market cap of the stock.
It also has absolutely nothing to do with the use of HFT. HFT only competes against other HFT. There is nothing here to suggest it has been effecting the price for the small customers (normally this is what HFT is credited at doing well, providing liquidity and removing pricing inefficencies) People hate HFT because it can go 'screwy'.
- crag 13y agoActually HFT does manipulate the overall price of the share. In the public markets. And that's the problem.
- yummyfajitas 13y agoHow? Can you explain the specific mechanism (i.e., what orders are placed by which party and when) and the role that "high frequency" plays in the mechanism?
- mschuster91 13y agoJust remember that Knight Capital episode. Algorithm ran amok, they lost a decent chunk of money (460M US$!) and were bought out a couple of weeks later (http://en.wikipedia.org/wiki/Knight_Capital_Group#2012_stock_trading_disruption http://en.wikipedia.org/wiki/Knight_Capital_Group#2012_stock...).
- hfttrader 13y agoThat isn't really an example of market manipulation. Market manipulation is an intentional manipulation of the market. (http://en.wikipedia.org/wiki/Market_manipulation http://en.wikipedia.org/wiki/Market_manipulation) The Knight Capital incident was an example of a firm performing bad trades due to an error in their systems. Their behavior certainly wasn't intentional or profitable. HFT isn't based on market manipulation. Some HFT firms perform market manipulation, as do some non HFT firms, but this practice is illegal. (For example, newedge was recently fined for market manipulation)
- elemeno 13y agoThe Knight Capital incident isn't unique to HFT firms - any firm that does automated trading can fall foul of similar problems.
- yummyfajitas 13y agoIt can even happen to manual traders. If you accidentally screw up and run the wrong strategy (e.g. buying Tweeter Inc. when you intended to buy Twitter), you'll very rapidly lose gigantic piles of money. Losing your money in the stock market != market manipulation.
- mschuster91 13y agoYeah, but the "HF" part of "HFT" tends to make an elephant out of a fly.
- elemeno 13y agoManipulate is a weasel word. Every trade will affect the price of a share but that's not manipulation, that's a functioning market. Unless you can explain why a trade made by HFT is somehow more devious or underhanded than a trade made by another actor in the market.