Re:A High Frequency Trader's Apology, Pt 2
by tptacek on Thursday April 26, 2012 @04:07PM
(#3895862)
You're not saying it simply. You're using the word "liquidity" as if it's an abstraction. The equivalent term is "cost of trading". When you replace the word "liquidity" with "cost of trading", your assertion stops making sense; it becomes "trading is cheap enough already". Huh?
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Re:A High Frequency Trader's Apology, Pt 2
by yummyfajitas on Thursday April 26, 2012 @04:47PM
(#3896040)
I think the point he is trying to make is that trading is cheap enough, and maybe smart people should focus their efforts on something other than making trading even cheaper.
Re:A High Frequency Trader's Apology, Pt 2
by aidenn0 on Thursday April 26, 2012 @04:50PM
(#3896059)
I think a better restatement of what soup is trying to say would be "20ms latency HFT market makers provide insufficiently more value to the market than 200ms latency HFT market makers to justify the human capital involved in obtaining the lower latency"
I have no opinion on whether more liquidity and "lowering the cost of trading" is a net good or bad. On the one hand it means less profit for market makers and a slightly lower price to buy stocks. On the other it means more volatility when algorithms mess up.
HFT doesn't matter at all to long and medium term investors that actually provide the value in the stock market(which is providing capital to help grow companies).
Re:A High Frequency Trader's Apology, Pt 2
by mmodahl on Thursday April 26, 2012 @10:18PM
(#3897182)
Long and Medium term investors should be investing broadly across the entire market.
Just a decade ago you needed to buy into a mutual fund and pay sales loads and expense ratios over 1%.
Now, you can own an ETF containing a piece of each of the Fortune 500 companies for an expense ratio < 0.1% because spreads in those 500 companies are narrow and trade constantly.
Medium term and long term investors love HFT because it saves them 0.9% in yearly expenses. If you've got 100k invested in SPY instead of some Fidelity fund, HFT is saving you $900 a year.