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It's all fascinating all right in many respects, but doesn't the noble business of fast trades and hedge funds give anyone on HN creeps anymore? After all it's

It's all fascinating all right in many respects, but doesn't the noble business of fast trades and hedge funds give anyone on HN creeps anymore? After all it's moneymaking in a form of taxing the society as a whole (if you think that this money comes out of nowhere or somehow is a newly created value, think again). Of course he used some of this money for good purposes, but still.

saym 12y ago
So, I'm against HFTs that trade on faster connections than others in the same pool. That advantage makes other traders BE the news on which to trade. But I think HFTs in a marketplace where execution speed is equal can serve to provide liquidity, not siphon it out. I could be wrong, but I'll wait to be more enlightened on the subject to change my opinion.
- igivanov 12y ago
  Why do you need millisecond(or is it microsecond?)-fast liquidity? What's wrong if there's a 10s or 1min window?
vasilipupkin 12y ago
This is a curious argument. If a car mechanic changes oil in your car and charges you 20 bucks, does he tax society $20? no, in this case value is being created, which is a fixed car. In the case of Rentec and other firms, the value is more liquid markets with different assets priced fairly with respect to each other. You may think that value is small, and it probably is, compared to say, saving lives, etc. - but it is no less real
- igivanov 12y ago
  From Wikipedia "In business, economics or investment, market liquidity is a market's ability to facilitate an asset being sold quickly without having to reduce its price very much (or even at all)." That's as much as I know about liquidity, so I am prepared to be enlightened. If you are an investor (as opposed to an HFT trader), what problem of yours does it solve if you can buy/sell in 1min or 10s or 1s, as opposed to in 0.001s or 0.0012s? If not your problem, then maybe of the society as a whole, or some group within it, excluding those who benefit from HFT trading as such?
  - RockyMcNuts 12y ago
    If the Googles of the world couldn't be publicly traded in liquid stock markets, there would be a lot fewer Googles. There are a lot of reasons Silicon Valley is what it is, and institutional investors and even (horrors!) hedge funds are part of it.
    - igivanov 12y ago
      So if you have a 1s (or 1min) trade window, it somehow makes stock market non-liquid and would kill a lot of companies? Is that what you are saying?
      - RockyMcNuts 12y ago
        I have no issue with a window. The institution cares more about liquidity being reasonably deep than executing in a nanosecond. There's always going to be a situation where a market maker on a 'floor' has an edge in analyzing short-term flow and setting a market-clearing price second by second, and a big upstairs institution has an edge in size and longer-term analysis, and the upstairs guy is paying something for liquidity. I don't think the market-maker is providing 0 value, but probably better if less energy gets spent on guessing what everyone else is doing and spy vs. spy gaming the system, and the more level and transparent the playing field is the better.

saym 12y ago

So, I'm against HFTs that trade on faster connections than others in the same pool. That advantage makes other traders BE the news on which to trade. But I think HFTs in a marketplace where execution speed is equal can serve to provide liquidity, not siphon it out. I could be wrong, but I'll wait to be more enlightened on the subject to change my opinion.

igivanov 12y ago
Why do you need millisecond(or is it microsecond?)-fast liquidity? What's wrong if there's a 10s or 1min window?

vasilipupkin 12y ago

This is a curious argument. If a car mechanic changes oil in your car and charges you 20 bucks, does he tax society $20? no, in this case value is being created, which is a fixed car. In the case of Rentec and other firms, the value is more liquid markets with different assets priced fairly with respect to each other. You may think that value is small, and it probably is, compared to say, saving lives, etc. - but it is no less real

igivanov 12y ago
From Wikipedia "In business, economics or investment, market liquidity is a market's ability to facilitate an asset being sold quickly without having to reduce its price very much (or even at all)." That's as much as I know about liquidity, so I am prepared to be enlightened. If you are an investor (as opposed to an HFT trader), what problem of yours does it solve if you can buy/sell in 1min or 10s or 1s, as opposed to in 0.001s or 0.0012s? If not your problem, then maybe of the society as a whole, or some group within it, excluding those who benefit from HFT trading as such?
- RockyMcNuts 12y ago
  If the Googles of the world couldn't be publicly traded in liquid stock markets, there would be a lot fewer Googles. There are a lot of reasons Silicon Valley is what it is, and institutional investors and even (horrors!) hedge funds are part of it.
  - igivanov 12y ago
    So if you have a 1s (or 1min) trade window, it somehow makes stock market non-liquid and would kill a lot of companies? Is that what you are saying?
    - RockyMcNuts 12y ago
      I have no issue with a window. The institution cares more about liquidity being reasonably deep than executing in a nanosecond. There's always going to be a situation where a market maker on a 'floor' has an edge in analyzing short-term flow and setting a market-clearing price second by second, and a big upstairs institution has an edge in size and longer-term analysis, and the upstairs guy is paying something for liquidity. I don't think the market-maker is providing 0 value, but probably better if less energy gets spent on guessing what everyone else is doing and spy vs. spy gaming the system, and the more level and transparent the playing field is the better.