4 ms·

It's more like taking a peek at the other players' cards, when only you have the ability to do that. We have a bunch of laws that establish the pretense that e

It's more like taking a peek at the other players' cards, when only you have the ability to do that. We have a bunch of laws that establish the pretense that everybody in the market is equal. I suspect we should get rid of most of the laws and drop the pretense. Folks should participate with the understanding that there are unfairly advantaged operators at all levels. But until that happens it's hard to morally square aspects of HFT.

lrm242 13y ago
No one can see the other players cards in trading unless the player shows them. Brokers sending IOIs to dark pools releases info to the market. Hitting venue A and then venue B in a serial fashion will release info the market, letting some traders cancel before you get to B. There is no mechanism on the lit markets for anyone to see an order BEFORE it interacts by either posting to the book or being crossed with another order and generating a trade. Anyone who says otherwise is unfortunately misinformed.
- foobarqux 13y ago
  Flash orders
  - lrm242 13y ago
    No longer available on lit US equities. A failed experiment by exchanges to compete with internalizers by providing the opportunity for price improvement to those orders who elect to be shown to participants prior to posting or taking. Can you think of one active in today's market?
    - foobarqux 13y ago
      On which instruments are flash orders still operational?
      - lrm242 13y ago
        In US equities? None on lit venues. I'm sure some dark pools still handle IOIs.
        foobarqux 13y ago
        Outside of US equities.
        lrm242 13y ago
        No idea. My game is US equities.
dllthomas 13y ago
"It's more like taking a peek at the other players' cards, when only you have the ability to do that." In what way is it like that?
theorique 13y ago
It's more like taking a peek at the other players' cards, when only you have the ability to do that. Yes and no. To continue the analogy, if your counterparty checks his cards every few minutes, while you are sitting at the table and monitoring continuously, is that your fault that your decision making strategy has a much tighter feedback loop than his? In a lot of ways, the HFT practitioners and the portfolio managers (or other active, but infrequent, trader) are playing complementary, but very different games. The portfolio manager wants to move large blocks of stock, and pays for liquidity. The market maker facilitates the motion of large blocks of stock, and charges a premium for assuming the risk of adverse, short-term market movements.

lrm242 13y ago

No one can see the other players cards in trading unless the player shows them. Brokers sending IOIs to dark pools releases info to the market. Hitting venue A and then venue B in a serial fashion will release info the market, letting some traders cancel before you get to B. There is no mechanism on the lit markets for anyone to see an order BEFORE it interacts by either posting to the book or being crossed with another order and generating a trade. Anyone who says otherwise is unfortunately misinformed.

foobarqux 13y ago
Flash orders
- lrm242 13y ago
  No longer available on lit US equities. A failed experiment by exchanges to compete with internalizers by providing the opportunity for price improvement to those orders who elect to be shown to participants prior to posting or taking. Can you think of one active in today's market?
  - foobarqux 13y ago
    On which instruments are flash orders still operational?
    - lrm242 13y ago
      In US equities? None on lit venues. I'm sure some dark pools still handle IOIs.
      - foobarqux 13y ago
        Outside of US equities.
        lrm242 13y ago
        No idea. My game is US equities.

dllthomas 13y ago

"It's more like taking a peek at the other players' cards, when only you have the ability to do that." In what way is it like that?

theorique 13y ago

It's more like taking a peek at the other players' cards, when only you have the ability to do that. Yes and no. To continue the analogy, if your counterparty checks his cards every few minutes, while you are sitting at the table and monitoring continuously, is that your fault that your decision making strategy has a much tighter feedback loop than his? In a lot of ways, the HFT practitioners and the portfolio managers (or other active, but infrequent, trader) are playing complementary, but very different games. The portfolio manager wants to move large blocks of stock, and pays for liquidity. The market maker facilitates the motion of large blocks of stock, and charges a premium for assuming the risk of adverse, short-term market movements.