It makes perfect sense, and I meant what I said.

60% of all US equity volume is pure high-frequency trading, and ETFs add roughly another 20% that’s literally just bots responding to market activity and bearish-bullish analysis on press releases. 2/3 of trading funds also rely on external data to price in decisions, and I think it was around 90% in 2021 use trading algorithms as their determining factor for their high-frequency trade strategies.

At its core, the movements that make up the market really IS data retrieval.

Sure, the market, but HFT is relatively tiny as a market and the profit it brings. Not to mention, it's essentially a zero-sum game.

Brought to you by your favorite Google LLM search result:

"The global high-frequency trading (HFT) market was valued at USD 10.36 billion in 2024 and is projected to reach USD 16.03 billion by 2030"

(unverified by a human, use at your own risk).

>"The global high-frequency trading (HFT) market was valued at USD 10.36 billion in 2024 and is projected to reach USD 16.03 billion by 2030"

>

> (unverified by a human, use at your own risk).

Honorable for mentioning the lack of verification; doing so would have dissolved the AI's statement, but jury's out on how much EXACTLY:

Per https://www.sciencedirect.com/science/article/abs/pii/S03784...:

"While estimates vary due to the difficulty in ascertaining whether each trade is an HFT, recent estimates suggest HFT accounts for 50–70% of equity trades and around 50% of the futures market in the U.S., 40% in Canada, and 35% in London (Zhang, 2010, Grant, 2011, O’Reilly, 2012, Easley et al., 2012, Scholtus et al., 2014)"

In my original reply, I used the literal median of that spectrum @ 60%

Jane Street - who has recently found themselves in hot water from the India ban - disputes that AI summary ALONE. Per https://www.globaltrading.net/jane-street-took-10-of-of-us-e... , Jane Street booked 20.5B in trading revenue, primarily though HFT's, just in 2024.

Brought to you by someone who takes these market movements too seriously for their own good.

Revenue is not profit

20 billion is a tiny fraction of the value represented in the stock exchange (and a tiny fraction of the profits made on it). HFT by its nature makes for a lot of volume but that's just a lot of shuffling of things around to peel a tiny fraction of value off the top, it's far from driving the market and the market isn't what makes the value in the first place.

The stock market does not grow potatoes.

And potatoes don't grow nearly as much economic value within industrial societies - as they do in, say, agrarian ones. All to say, I don't understand your point.

The stock market does not make movies either.

The percentage is irrelevant without knowing how they really work and how much profit they make. They could be at 95% with 0.1% of margin it wouldn’t mean much for the market.

At the end of the day talking about HFT this way is to not know what they do and what service they offer to the market. Overall they are not trending makers but trend followers.

What? THAT CASH comes from owning the inside spread on roughly half of every US equity share that trades. They quote a micro-price adjustment, and it pushes out anyone slower - which exactly the “service” that lets retail investors, like us, hit a bid or ask.

Honestly, whether YOU want to call that trend-following or market-making - I can't be arsed, but it’s still data-retrieval that runs THE institutional scale

The ghost of Charlie Munger has entered the chat.

Get to my original reply to you with all the sources first :) then Charlie can join in the fun!

Your argument is unconvincing.

Even if the HFT market is 100 times the smallest estimate, it's still a relatively small portion of the world economy, which is approximately $100 trillion. HFT is a fascinating intersection of finance/C++/JVM for competitive super-nerds. It happens to add liquidity to the market, as far as I understand. I am not demonizing it in any way.

However, it's not a significant portion of the US or global economy by any stretch. The argument over whether it sets or follows stock prices is mostly philosophical at this point.

>"HFT is a fascinating intersection of finance/C++/JVM for competitive super-nerds. It happens to add liquidity to the market, as far as I understand. I am not demonizing it in any way."

>"The argument over whether it sets or follows stock prices is mostly philosophical at this point."

Sure, I respect that!

  > 60% of all US equity volume

Volume is not value.

It is when the value of something comes from its volume of buys/sells.

And that does not describe the stock market. Volume affects liquidity and spreads, not fundamental value.

A market can set a price with a single buyer and seller. More volume just makes the price more accurate.

Sort of. I've addressed this with another commenter already [1]

>"What? THAT CASH comes from owning the inside spread on roughly half of every US equity share that trades. They quote a micro-price adjustment, and it pushes out anyone slower - which exactly the “service” that lets retail investors, like us, hit a bid or ask.

>

>Honestly, whether YOU want to call that trend-following or market-making - I can't be arsed, but it’s still data-retrieval that runs THE institutional scale"

I find this comment chain becoming cyclical, so I'll likely end it here.

1 - https://news.ycombinator.com/item?id=44495361

tell that to the derivatives market. It should be obvious that the stock market is divorced from actual value. fundamentals are meaningless now, there is zero penalty for failing to deliver securities, and 95% of all retail trades dont even hit lit markets. Price discovery doesnt exist and neither does the concept of a free market. Open your eyes and see that the market is a sham ponzi scheme where siphoning real value out kf the system is its main objective.