Re:Intruder at the top of the 20 meter amateur band?
by cma on Monday January 11, 2021 @06:04PM
(#25739168)
Saving one microsecond is rewarded the same as saving one millisecond, as long as you beat out the next best guy. There are vast diminishing returns to society but the winner is still rewarded the same so incentivized to make it faster and faster, ultimately burning away energy and misallocating capital until the reward is exhausted, and then repeating each time a new generation of hardware is out.
[ Parent
| on HN ]
Re:Intruder at the top of the 20 meter amateur band?
by giantrobot on Monday January 11, 2021 @08:10PM
(#25740924)
Not quite, you're forgetting the T in HFT. If everyone was just buying securities a microsecond vs a millisecond might not matter much. What happens is a lot of HFTs act as market makers. They arbitrage positions they create which screws over any non-HFTs. It also moves the price of securities for no reason which affects everyone holding that security. There's also been plenty of cases of HFTs doing front-running and spoofing.
The effects of HFTs aren't limited to HFT vs traditional traders. Their artificial arbitrage affects people's retirement funds and the like. It wouldn't be so bad if they were just making money off other traders but instead they're making money off everyone with money in the markets.
Re:Intruder at the top of the 20 meter amateur band?
by zozbot234 on Monday January 11, 2021 @08:16PM
(#25740979)
> It also moves the price of securities for no reason which affects everyone holding that security.
Huh? It's narrowing bid-ask spreads, which is beneficial to other market actors. There's nothing "artificial" in it other than betting that the price fundamentals won't move against them, like any other market maker.