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Re:What Business is Wall Street In? by tptacek on Friday September 21, 2012 @08:54PM (#4556700)
Liquidity costs money. It has buyers and sellers. Obviously, those aren't terms I'm making up. I know you're not making up "injector" either, but that term is less precise.

If you want to sell at 505, an HFT can't change that. Place a limit sell at 505.

If you're not willing to hold out for 505 and want to sell at the market price, you're a liquidity buyer paying a premium (of some sort) for getting out of the market right now.

People love to point out this scenario where the HFT buys something at $9 that a human would have paid $10 for. They never acknowledge the fact that by doing that, the HFT assumed the downside risk; the HFT is now to some extent illiquid and exposed to the market. If the price goes to $11, the HFT wins, sure. But if the price goes to $8 --- which should be equally likely, else why sell --- the HFT is fucked.

Broccoli is delicious. Here's what you do: blanch it in boiling water, just like 20-30 sec, shock it in ice water, and then dry it off. Put it in a bowl, douse it in olive oil, shake some fish sauce into it, cumin, chili flakes, maybe a little sriracha or maybe some lemon juice. Shake the bowl up. Now grill it. Yum. Eat it with sriracha mayonnaise, which is the highest calling of mayonnaise.

Re:What Business is Wall Street In? by lifeisstillgood on Friday September 21, 2012 @09:51PM (#4556826)
Yes, the HFT assumes the risk, for it is acting as a Market maker. My point was that there already was a Market maker there - another is not more liquidity. Liquidity is a binary term IMO. Having two Market makers in same product does not make more liquidity it just makes liquidity cheaper. That might benefit the seller but makes no difference to the exchange function

in the comics, when Superman is protecting Metropolis and Supergirl turns up, she cannot do anything the Man of Steel could not do - she just looks better in tight blue Lycra.

Kudos for your recipie.

Edit removed my dumb, knee jerk, unappetising broccolli recipie/comment on state of English cooking in my childhood. Nevermind.

Re:What Business is Wall Street In? by tptacek on Saturday September 22, 2012 @11:01AM (#4557971)
Isn't the cost of liquidity its only reasonable metric? Anyone can be "liquid" if they're willing to take a sufficient hit on prices. In that sense, "just makes liquidity cheaper" is like saying "just makes more liquidity".
Re:What Business is Wall Street In? by dchichkov on Friday September 21, 2012 @11:19PM (#4557004)
Actually having two (or more) market makers benefits the market. Because a single market maker can pause or quit at any moment in time.
Re:What Business is Wall Street In? by lifeisstillgood on Saturday September 22, 2012 @07:03AM (#4557606)
That's the same thing ... An extra Market maker provides no benefit apart from being able to easily prevent there being no Market maker

Anyway makers have specialisms and get advantages from the exchange - they are not supposed to just bugger off home cos it's Tuesday

Re:What Business is Wall Street In? by tptacek on Saturday September 22, 2012 @11:09AM (#4557988)
That's not true. An extra market maker provides the benefit of competing market makers, which should reduce the spread.

Most markets are not specialist markets. Specialists at the NYSE were accused of skimming hundreds of millions of dollars from customers. They're an anachronism and a much more disquieting idea than robots competing to provide the best price --- which is pretty much what most HFT systems do.

Re:What Business is Wall Street In? by dchichkov on Sunday September 23, 2012 @02:01AM (#4560185)
But. That's the thing. They CAN 'bugger off' home at any time. And often do.

If a particular market maker can't work for some reason with some particular symbol [there are thousands of symbols], at some particular time, he would just pause. And they often do.