It's quite a statement. You're almost saying capitalism and efficient markets are pointless. Maybe they are, but I think it's nothing like crypto.
In the old days before HFT, you weren't sure you'd get the best price. You'd have to rely on a broker to make sure that happens, but as a retail trader you generally got a worse price/out of date price.
Nowadays with HFT you can get pretty much the best price anywhere. Those <1ms HFT traders make that happen. It's the efficient market hypothesis in effect, made possible by HFT.
Now is it pointless to shave off even more ns in the all out war to grab a piece of the order flow? For retail and institutional investors, at a certain point, yes it's completely pointless.
But it's also just pure capitalism at work. HFT firms compete against each other, and the competition is about speed to provide the best price and volume. If you try to regulate with something like enforced delays, then what do you compete on instead?
> You're almost saying capitalism and efficient markets are pointless.
Capitalism necessitates efficient markets (and efficient markets necessitate HFTs) so any criticism of HFTs is a direct criticism of capitalism as well. I mean this isn't really a problem that's specific to HFTs -- there are just a lot of jobs that we can perceive as providing no value or even negative value (jobs that are possible specifically due to capitalism e.g. payday loans, 2008 style trading, certain scams or predatory practices etc.)
I think we can all agree that this is a flaw, and we're not criticizing capitalism to replace it with something else, but rather just recognizing this as a problem. At the end of the day, a useless job is a useless job even if it exists solely because of capitalism.
You are profiting off workers as a middle man in the economy by doing HFT, and trying the justify it by some vague concept of the "correct price". You are producing nothing of value, merely taking away value before someone else notices it is there.
>You're almost saying capitalism and efficient markets are pointless. Maybe they are, but I think it's nothing like crypto.
People are saying this because, HFT sounds similar to 'crypto mining'.
That's people with best infrastructure, the 'big-guys' -- win.
While leaving out the retail investors as broiler chicken, pumped with 'drugs' (by influencers) to spend more on imaginary assets, so that they can be used for 'food' by these 'big-guys'.
There are different influencers for retail investors vs crypto.
In retail investing there are promises of 'retirement paradise', actual tax deductions, the Jim Cramer-like people (at least what I heard in US)
For crypto investing the influencer are different, the geography is wider.
A promise to participate in markets if you do not live the country that has adopted US/UK-based financial services.
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By the way, I think the markets will still have liquidity if there is a rule to wait, for say, 30 min before a stock that was just recently bought -- can be sold (unless by a clear fat finger mistake)
This rule will cause the HFTs to stop existing in the current form.
So are retail investors truly no different from the people gambling their money on the lottery at the 7/11 every night?
Do any regular pedestrian middle class retail investors EVER actually earn enough to retire on? Or do anything meaningful with? If so.. what is THEIR secret sauce, since it's not HFT...
a)Members of political elite that get insider trading stock tips.
(illegal of course). The number of folks in usa congress and senate that become
'very lucky' investors after they join the rank, has to be amazing
b)Lucky
c) everybody else -- that looses.
Overtime, I would say last 30 years, the amount of 'influencing' retail investors to trap them into unreasonable actions had gradually increased.
So the percentage of folks going becoming the victims of the charade, will become higher.
Certainly if you concentrate on ( b ) you create the plausible deniability defense for the manipulators
In the old days before HFT, you weren't sure you'd get the best price. You'd have to rely on a broker to make sure that happens, but as a retail trader you generally got a worse price/out of date price.
Nowadays with HFT you can get pretty much the best price anywhere. Those <1ms HFT traders make that happen. It's the efficient market hypothesis in effect, made possible by HFT.
Now is it pointless to shave off even more ns in the all out war to grab a piece of the order flow? For retail and institutional investors, at a certain point, yes it's completely pointless.
But it's also just pure capitalism at work. HFT firms compete against each other, and the competition is about speed to provide the best price and volume. If you try to regulate with something like enforced delays, then what do you compete on instead?