4 ms·

HFTs are only accessible to a select few. And are only worth doing over large sums of capital. Is it rigging if my dice has more sixes than yours?

by 1stop 13y ago

yummyfajitas 13y ago
This is incorrect - many HFTs are just one programmer investing his savings. Many of the big guys started this way.
- crdoconnor 13y ago
  THIS is incorrect. From the article: >A direct feed from one exchange could be $10,000 to $60,000 a month. If the SIP is no longer real-time, it means that people who want to get real-time data have to pay, well, significantly more. It’s no exaggeration here to say you go from $1 a month to well over $100,000, with your own networking staff and a room full of computers just to get real-time pricing. $100k a month is now something you can stump up out of your savings is it?
  - deleted 13y ago
    [deleted]
  - yummyfajitas 13y ago
    You don't need to pay $100,000 month for access. My NDA forbids from revealing pricing info, but I can say I worked for an HFT fund that was just a programmer working out of his living room.
- 1stop 13y ago
  ... Neither of your statements invalidated my statements. Unless you are saying that programmers are a majority, and their savings are typical of the same majority? EDIT: (And reading the other response, it seems you are in fact incorrect).
  - spikels 13y ago
    Here's a few examples from at 2010 CNBC story of top HFTs. It's a pretty diverse group but most were programmers and most started (relatively?) small. http://www.cnbc.com/id/39038892 http://www.cnbc.com/id/39038892
    - ThomPete 13y ago
      Yet the price to "play the game" does not exactly say "small guy".
      - hft_throwaway 13y ago
        Trading is the only industry on earth where we even debate whether Joe Schmoe off the street should have a chance at competing with huge institutions, and oddly enough it's probably one of the most purely competitive things in the world. Most guys who play ball at the local park can't be Lebron James. A guy sitting at home has no shot at market-making liquid stocks, and low latency is only the tip of the iceberg as to why. In any case it is not expensive to start a firm like this relative to most things in finance or even other physical market-making businesses like running a retail store. You could do it with a few million dollars and a dozen technologists/researchers. That's why this debate is so stupid. Banks who are mostly the ones complaining about having trouble executing could easily hire up a team to build better routers and execution algos for them. Most of them have, even, which has cut HFT profitability considerably. The laggards prefer to go on CNBC rather than invest in technology to keep up.
        ThomPete 13y ago
        So you are comparing startup cost of a ball with the startup cost of a "few million dollars" to start a HFT company? I have no issue with the market in general or people making money providing investment to others who need it. Where I am having problems is when the market becomes it's own closed loop and the money is made inside of that loop. I been on the sideline of this industry for many years now and I have yet to see any company who is successful in the long run be so because they play a fair game. Reading stuff like this: http://moneymorning.com/2012/10/15/the-truth-about-high-frequency-trading-and-the-coming-market-crash/ http://moneymorning.com/2012/10/15/the-truth-about-high-freq... certainly doesn't help. "...What they are doing is trying to influence, I call it manipulate, what other traders and investors do with their bids and offers. They are trying to fake or set-up other market participants to react to the quotes the HFT players fire out onto the exchanges for all the stocks they trade. Only the HFT quotes sent out aren't meant to be acted on. They aren't looking to buy on their bid quotes or sell on their offer quotes. Instead, they are sending out orders to "ping" markets. Ping refers to how sonar works. For example, a submarine sends out a sonar beep which hits a target and sends back a sound (which sounds like a ping) which the sonar operator "reads" to determine the pinged object's distance and shape. HFT players are constantly pinging stocks where their quotes are housed and displayed. They send out their orders to manipulate others to adjust their quotes, which get fed into the HFT algorithms to determine any directionality; then, if an opportunity exists the HFT computers buy or sell shares that someone else has put onto the market. They aren't quoting constantly as bona fide "market-makers" are supposed to do, which they claim they are acting like. They are simply putting out millions of fake bids and offers which they pull almost immediately, just to read the movement of other market participants who react to the HFT come-ons. It isn't illegal. But it is manipulation. The buyers and sellers the HFT crowd trades with aren't forced to trade, they are willing to trade -- it's just that the prices they trade at may have been manipulated..." Can you explain to me how HFT benefits society in general? What would happen if we didn't have HFT? Would the market crash? Would there suddenly be no money to invest with?
- dagw 13y ago
  This perhaps used to be true, but the HFT arms race has pushed the cost of entry up to the point where you are looking $50k-$100k a month in infrastructure costs just for a seat at the table, and many times more than that if you want to play with the big boys. And that is in addition to the money you actually plan to invest.

HFTs are only accessible to a select few. And are only worth doing over large sums of capital. Is it rigging if my dice has more sixes than yours?

by 1stop 13y ago

HFTs are only accessible to a select few. And are only worth doing over large sums of capital. Is it rigging if my dice has more sixes than yours?

yummyfajitas 13y ago

This is incorrect - many HFTs are just one programmer investing his savings. Many of the big guys started this way.

crdoconnor 13y ago
THIS is incorrect. From the article: >A direct feed from one exchange could be $10,000 to $60,000 a month. If the SIP is no longer real-time, it means that people who want to get real-time data have to pay, well, significantly more. It’s no exaggeration here to say you go from $1 a month to well over $100,000, with your own networking staff and a room full of computers just to get real-time pricing. $100k a month is now something you can stump up out of your savings is it?
- deleted 13y ago
  [deleted]
- yummyfajitas 13y ago
  You don't need to pay $100,000 month for access. My NDA forbids from revealing pricing info, but I can say I worked for an HFT fund that was just a programmer working out of his living room.
1stop 13y ago
... Neither of your statements invalidated my statements. Unless you are saying that programmers are a majority, and their savings are typical of the same majority? EDIT: (And reading the other response, it seems you are in fact incorrect).
- spikels 13y ago
  Here's a few examples from at 2010 CNBC story of top HFTs. It's a pretty diverse group but most were programmers and most started (relatively?) small. http://www.cnbc.com/id/39038892 http://www.cnbc.com/id/39038892
  - ThomPete 13y ago
    Yet the price to "play the game" does not exactly say "small guy".
    - hft_throwaway 13y ago
      Trading is the only industry on earth where we even debate whether Joe Schmoe off the street should have a chance at competing with huge institutions, and oddly enough it's probably one of the most purely competitive things in the world. Most guys who play ball at the local park can't be Lebron James. A guy sitting at home has no shot at market-making liquid stocks, and low latency is only the tip of the iceberg as to why. In any case it is not expensive to start a firm like this relative to most things in finance or even other physical market-making businesses like running a retail store. You could do it with a few million dollars and a dozen technologists/researchers. That's why this debate is so stupid. Banks who are mostly the ones complaining about having trouble executing could easily hire up a team to build better routers and execution algos for them. Most of them have, even, which has cut HFT profitability considerably. The laggards prefer to go on CNBC rather than invest in technology to keep up.
      - ThomPete 13y ago
        So you are comparing startup cost of a ball with the startup cost of a "few million dollars" to start a HFT company? I have no issue with the market in general or people making money providing investment to others who need it. Where I am having problems is when the market becomes it's own closed loop and the money is made inside of that loop. I been on the sideline of this industry for many years now and I have yet to see any company who is successful in the long run be so because they play a fair game. Reading stuff like this: http://moneymorning.com/2012/10/15/the-truth-about-high-frequency-trading-and-the-coming-market-crash/ http://moneymorning.com/2012/10/15/the-truth-about-high-freq... certainly doesn't help. "...What they are doing is trying to influence, I call it manipulate, what other traders and investors do with their bids and offers. They are trying to fake or set-up other market participants to react to the quotes the HFT players fire out onto the exchanges for all the stocks they trade. Only the HFT quotes sent out aren't meant to be acted on. They aren't looking to buy on their bid quotes or sell on their offer quotes. Instead, they are sending out orders to "ping" markets. Ping refers to how sonar works. For example, a submarine sends out a sonar beep which hits a target and sends back a sound (which sounds like a ping) which the sonar operator "reads" to determine the pinged object's distance and shape. HFT players are constantly pinging stocks where their quotes are housed and displayed. They send out their orders to manipulate others to adjust their quotes, which get fed into the HFT algorithms to determine any directionality; then, if an opportunity exists the HFT computers buy or sell shares that someone else has put onto the market. They aren't quoting constantly as bona fide "market-makers" are supposed to do, which they claim they are acting like. They are simply putting out millions of fake bids and offers which they pull almost immediately, just to read the movement of other market participants who react to the HFT come-ons. It isn't illegal. But it is manipulation. The buyers and sellers the HFT crowd trades with aren't forced to trade, they are willing to trade -- it's just that the prices they trade at may have been manipulated..." Can you explain to me how HFT benefits society in general? What would happen if we didn't have HFT? Would the market crash? Would there suddenly be no money to invest with?
dagw 13y ago
This perhaps used to be true, but the HFT arms race has pushed the cost of entry up to the point where you are looking $50k-$100k a month in infrastructure costs just for a seat at the table, and many times more than that if you want to play with the big boys. And that is in addition to the money you actually plan to invest.