PG articles are not scripture that you can just link to a quote from to end debate, you know. =]

I do think it's legitimate to look at sources for articles, especially when there are strong conflicts of interest.

My intention wasn't to end the debate, but rather to steer it away from the substance-lessness that characterizes most debates about HFT.

That being said (disclaimer: I am a HFTer), this article is a pretty weak defense of HFT. Like others have pointed out it makes a lot of assertions not based on data/fact. However, I've yet to read a criticism of HFT that doesn't commit the same mistake (and I've read a lot of them).

For a defense of HFT that uses hard data I'd direct people here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1501135

"Everyone must submit himself to the governing authorities, for there is no authority except that which God has established."

Romans 13:1

The Bible is not scripture that you can just link to a quote from to end debate, you know.

Stack Overflow

If pdoughtie were saying "this must be wrong, because ..." then you would have a good point, but that's not quite what's going on.

The article contains a number of assertions, central to its claim but with little evidential support in the article. (For instance: "No serious market observer disputes the claim that volatility would not be higher without the liquidity provided by high frequency traders" -- has the author really looked hard for serious market observers with a different opinion? -- and "High frequency traders can only trade profitably when their trades push a stock price towards fair value"; what exactly is "fair value" supposed to mean, why shouldn't there be short-term bubbles among HF traders just as there are long-term bubbles among slower traders, and who says HF traders can't all happen to trade unprofitably in some particular case?.) It may very well be that those claims are true, but we basically have to trust the author. And that is what we may quite rightly and rationally be less inclined to do, if we know that the author has a vested interest in persuading us.

Certainly he does have a vested interest. Not the end all-be-all, but he does cite the board of governors and hendershott-riodan as evidence it reduces volatility, some indirect evidence in the short selling ban, the history of QQQ as evidence of lowering cost, tightening spreads.

The 'fair value' he's talking about us just the supply-meets-demand of that stock for that particular moment-- that moment could definitely take place in a larger bubble of that security. The mini-bubble within high freq trading he refutes by reasoning only ("another hft would detect this"), so I think a more concrete example would've been more convincing. As with all bubbles the question is how far out of line can the price get, and how quickly will the price be brought back to reality

High frequency trading is not the issue. the issue is an automated system watching for large incoming orders. When this system observes an incoming order, it purchases available supplies at lower cost than the incoming order will pay, then sells the stock to the large buyer.

Is it clever arbitrage? is it a massive denial of service so some people can play middle man? I don't know.

However, Cameron Smith has created an excellent straw man of his opponents. This is an ad hominem argument.

If geeks have one character flaw that holds them back it's the need to understand everything in excruciating detail. In the real world you can't possibly learn enough to engage in informed debates on every topic, however understanding human nature and paying attention to whose interests are served by what ideas will get you a lot of mileage for minimal effort. Maybe the GP isn't a great thought-provoking HN comment, but it's definitely something that should be in the back of our minds.