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Investors evaluate the company's products for themselves, and buy-and-hold to route society's resources appropriately. Traders prey on investors, forcing them t

Investors evaluate the company's products for themselves, and buy-and-hold to route society's resources appropriately. Traders prey on investors, forcing them to waste effort on behaving less predictably so their transactions aren't front-run.

encoderer 12y ago
> Traders prey on investors, forcing them to waste effort on behaving less predictably so their transactions aren't front-run. It's not your fault, but I think you've just been spun by the Michael Lewis Flashboys hype machine here. Frontrunning isn't really a problem. Did you know the majority of orders are price IMPROVED, in part due to the activities of high frequency traders? Meaning, you place an order to buy at $10 and it's filled at $9.995 because some HFT wanted your order flow so they improve the best quote by 1/2 penny to get to fill your order. Moreover, if you're a buy-and-hold investor, even if you were "front run" you would never even know nor miss the 1/2 penny per share or whatever. Respectfully, this is just a subject that's complicated and it to grok it you need to give it some real thought.
- prodigal_erik 12y ago
  Where did they get them? If it's their fault equities were not available at $9.995 from anyone else, they haven't provided any liquidity. I don't believe hold times in milliseconds actually facilitate trades that would not have happened anyway.
  - encoderer 12y ago
    You're so hung-up on frontrunning. I challenge you to find a retail investor actually harmed by frontrunning. Even in Flashboys the protagonist was a big trader trying to move 10,000 shares. It simply has no affect on retail traders. Let me just walk you through how an order is filled: Your brokerage sends the order to one or many of the firms that specialize as so-called "liquidity providers." These companies publish quotes for all securities, both a bid and ask. These companies make money by knowing what other people are doing -- capturing order flow -- so they try to publish the lowest quote possible in order to get the order because by law the brokerage must fill the order at the "national best bid/offer". This results in price improvement for the customer over half the time. This improvement doesn't get squeezed from another counter-party as I think you're thinking, and actually both counter-parties are likely to be price-improved. The improvement comes from smaller bid/ask spreads. Here's what I know for certain: With high frequency trading tech comes more liquidity, with lower commissions, faster trade execution, and a small bid/ask spread. There are more penny-wide markets than ever before. Look, I'm just a retail trader. I have no reason to shill for HFT firms. And I even love Michael Lewis. But flashboys and this whole dark pools, front-running boogeyman is just so much bs.

encoderer 12y ago

> Traders prey on investors, forcing them to waste effort on behaving less predictably so their transactions aren't front-run. It's not your fault, but I think you've just been spun by the Michael Lewis Flashboys hype machine here. Frontrunning isn't really a problem. Did you know the majority of orders are price IMPROVED, in part due to the activities of high frequency traders? Meaning, you place an order to buy at $10 and it's filled at $9.995 because some HFT wanted your order flow so they improve the best quote by 1/2 penny to get to fill your order. Moreover, if you're a buy-and-hold investor, even if you were "front run" you would never even know nor miss the 1/2 penny per share or whatever. Respectfully, this is just a subject that's complicated and it to grok it you need to give it some real thought.

prodigal_erik 12y ago
Where did they get them? If it's their fault equities were not available at $9.995 from anyone else, they haven't provided any liquidity. I don't believe hold times in milliseconds actually facilitate trades that would not have happened anyway.
- encoderer 12y ago
  You're so hung-up on frontrunning. I challenge you to find a retail investor actually harmed by frontrunning. Even in Flashboys the protagonist was a big trader trying to move 10,000 shares. It simply has no affect on retail traders. Let me just walk you through how an order is filled: Your brokerage sends the order to one or many of the firms that specialize as so-called "liquidity providers." These companies publish quotes for all securities, both a bid and ask. These companies make money by knowing what other people are doing -- capturing order flow -- so they try to publish the lowest quote possible in order to get the order because by law the brokerage must fill the order at the "national best bid/offer". This results in price improvement for the customer over half the time. This improvement doesn't get squeezed from another counter-party as I think you're thinking, and actually both counter-parties are likely to be price-improved. The improvement comes from smaller bid/ask spreads. Here's what I know for certain: With high frequency trading tech comes more liquidity, with lower commissions, faster trade execution, and a small bid/ask spread. There are more penny-wide markets than ever before. Look, I'm just a retail trader. I have no reason to shill for HFT firms. And I even love Michael Lewis. But flashboys and this whole dark pools, front-running boogeyman is just so much bs.