Re:A High Frequency Trader's Apology, Pt 2
by yummyfajitas on Friday April 27, 2012 @07:01AM
(#3898480)
Insurance companies don't have to screw up for people to benefit from having insurance.
How does insurance benefit someone who's car doesn't crash? It's a couple of hundred bucks a month for nothing.
What value does the HFT add in this case?
None. If Fry doesn't want to cross the spread and pay for liquidity, he doesn't have to.
Similarly, Arthur's Steakhouse doesn't benefit me because I'm a vegetarian and don't want to buy what they are selling.
Don't HFTs only work with stocks that have high volume? How is adding liquidity when there's already high volume a value?
First of all, many HFTs do work with the long tail of US securities. Second, adding liquidity via price improvement (i.e., narrowing the spread) is useful even if volume is high.
How does insurance benefit someone who's car doesn't crash? It's a couple of hundred bucks a month for nothing.
What value does the HFT add in this case?
None. If Fry doesn't want to cross the spread and pay for liquidity, he doesn't have to.
Similarly, Arthur's Steakhouse doesn't benefit me because I'm a vegetarian and don't want to buy what they are selling.
Don't HFTs only work with stocks that have high volume? How is adding liquidity when there's already high volume a value?
First of all, many HFTs do work with the long tail of US securities. Second, adding liquidity via price improvement (i.e., narrowing the spread) is useful even if volume is high.