lowtrade

[lowtrade]

Since the high frequency trading subject has become a hot topic at media outlets again. I've become vocal again. Here's an old video on HFT, I posted back in 2012 & 13. Cool when one see's the change.

2007 to 2013 Ps; keep an eye on the jump late 2008 months 7, 8, 9 when the market crashed.

Back then I was mostly upset about the ability "advantage" of HFT. More then the action of HFT. Because they were taking such small pieces of the 1 tic, 1 second, millisecond arbitrage pie, retail was not effected. But understanding the power available they could as easily control markets. IE cause worst case down falls of markets and or countries. The flash crash, while unintentional was an example. But understand with programs and hardware, a terrorist could intentionally cause flash crashes. And how the greed driven market can allow this possibility to exist is beyond me.

There are all kinds of safe guards for hacking power plants or military computer systems, but exchanges allow high freq trading because of the trade fees involved and the government (SEC) is keeping the attack door open in our monitory system. Knowing the ability exists. Money talks, so I just had to except the practice, like when naked shorting was prevalent; as the market we trade.


Of the many things HFT houses can do to trading, besides increase liquidity LOL, is quote stuffing, bid/ask manipulation, and general system floods with their algorithms and high end computer systems.

Quote stuffing causes latency lags of smart order routers allowing one exchanges trade speed to become slower then another. Then they can buy at one exchange and sell at another for arbitrage gains in milliseconds. Basically gaming the system. This actually happens mostly with larger order executions from hedge funds or institutional orders, which their equipment can see. The funny thing is big guys are the one's being scalped. And you would think they, having so much power, would fight to suspend HTF.

Bid/Ask manipulation algorithms will flood the data channel ports with thousands of erroneous high or low quotes at extremes from the BBO (best bid order), in milliseconds, changing order flow direction, before 1 tic occurs. This doesn't actually cause runs or dives retail sees unless they are continuous attacks. (The possibility problem) And in most cases all the HFT trader wants is 1 tic arbitrage, millions of times.

So while awareness is all someone small like I can do. Everyone should want the up tic rule re-instated and HFT trade type cancelled. IMO