[Samseau]

Not rigged, huh?

https://twitter.com/WSJbreakingnews/stat...0838274048

[scorpion]

I find it really disheartening that this issue was completely ignored until Michael Lewis wrote a book about it and went on CNBC. HFT has been going on for years and has been well-discussed in the financial blogosphere. But it's like nothing in this country can ever be taken seriously until someone who has already been baptized by the mainstream media dares to rock the boat. And since most of those established media types have balls the size of raisins, it almost never happens.

[Samseau]

The people defending HFT are acting stupid. If I just called you stupid, sorry. But you are.

Something can only be considered fair if everyone has equal access to it. Can anyone setup an HFT algo on wall st? No, you cannot. Only people with access to HFT are the super rich who can buy the licenses and rights to use it. And the fact that HFT never loses means HFT isn't a gamble or risk, like most businesses or stock trading are.

On eTrade or Scottstrade, the amount of times you can buy and sell a position within a day is 3 or 4 times. Yet HFT can buy or sell a position 4000 times per second, yet us "common folk" can only buy or sell a position 3 or 4 times per day. If this doesn't offend your moral sensibilities, then you are probably a maniac who doesn't have any moral sensibilities.

[Giovonny]

I have friends who work on Wall Street and make good money..

They tell me that..

Wall Street, in many ways, is a scam.

These are guys who make really good money.

I have even hung out with guys on this forum who are doing really well on Wall St.

You know what they told me..

"I basically steal from people".

That is a direct quote from a guy who works on Wall Street.

[berserk]

The real crime is actually not in the act itself but the concerted effort to mislead the public. It's like that with a lot of things in the modern world. Information is power, but very few people actually realize how little they really know. The masses are always almost spoon fed information that goes directly against their self interest. It's come to the point where you will be best served by always questioning the official dogma.

[Giovonny]

(04-04-2014 12:23 PM)berserk Wrote:  

The real crime is actually not in the act itself but the concerted effort to mislead the public.

The public should be well informed.

I remember a savings and loan scandal in the 1980s

Some guy was selling junk bonds in the 1990s (Micheal Milken?)

Bernie Madoff, Enron, etc., etc,

The bank fraud of 2008.

Goldman Sachs has been exposed many times in the media.

I don't even follow this stuff and I could figure it out.

The general public is stupid. That's the bottom line. Wall Street takes advantage of stupid, uneducated, uniformed people.

[cardguy]

For what it is worth - Michael Milken was hard done by.

The old money financial establishment got scared and ganged up to bring him down.

One of his problems was his face. Even though he didn't do anything wrong - his face looks suspicious and evil as fuck.

lol

[cardguy]

The same is true (to a lesser extent) of Enron.

http://www.rooshvforum.network/thread-34351.html

But I am not as confident with the Enron case as I am with miscarriage of justice that Michael Milken faced. Still - Malcolm Gladwell gives some interesting food for thought when discussing Enron.

[samsamsam]

(04-04-2014 02:10 PM)Giovonny Wrote:  

(04-04-2014 12:23 PM)berserk Wrote:  

The real crime is actually not in the act itself but the concerted effort to mislead the public.

The public should be well informed.

I remember a savings and loan scandal in the 1980s

Some guy was selling junk bonds in the 1990s (Micheal Milken?)

Bernie Madoff, Enron, etc., etc,

The bank fraud of 2008.

Goldman Sachs has been exposed many times in the media.

I don't even follow this stuff and I could figure it out.

The general public is stupid. That's the bottom line. Wall Street takes advantage of stupid, uneducated, uniformed people.

Well, part of it also is the heavy lobbying and bankers going into government service to create laws to help their buddies.

It is not uncommon for bankers going to work for the government to get big payouts from the banks they work for. Banks know it is to their advantage. http://www.republicreport.org/2014/big-banks-tpp/

I agree the public doesn't spend much time getting into the details. There needs to be some personal responsibility in that. Much like the mortgages, people were surprised that they got adjustable rate when they thought they got fixed etc. But banks are not innocent, many just weigh the cost of the penalties vs the profits they can make. It always seems the settlements admit no fault and like I said the penalties are less than they made. SEC folks want to have their big payday also and going too hard at a bank hurts their pocket book.

I think we would be remiss to believe that banks don't try to hide info from the public, they have no reason to not hide it. And the penalties don't hurt when they get caught.

The incentives are all messed up in our society, no surprise there. Just stay informed and be careful.

[Lou pai]

Samseau, you can trade more than 3 or 4 times a day as an individual if you have more than 25k in your account. It's called the pattern day trading rule.

HFT spend millions of dollars on technology but you think you should be able to log on to an etrade account and compete with them.

Also HFT firms do lose, a lot of them have gone out of my business in the past few years

[Steve9]

The SEC should have put a trading fee of $0.01 on every trade years ago. That would have stopped the majority of the HFT companies from ever starting.

[rover]

(04-04-2014 02:58 PM)Lou pai Wrote:  

Samseau, you can trade more than 3 or 4 times a day as an individual if you have more than 25k in your account. It's called the pattern day trading rule.

HFT spend millions of dollars on technology but you think you should be able to log on to an etrade account and compete with them.

Also HFT firms do lose, a lot of them have gone out of my business in the past few years

PDT rule is "no more than 4 round trip trades within 5 business days". Just a stupid regulation, - get more than 25K on account, or switch to a foreign broker to avoid it.

I think the biggest problem with the HFT racket is that stock exchanges, banks and HFT firms work together to outright steal pennies out of every transaction that investment firms, mutual and pensions funds make on behalf of millions of individual investors: mostly average Joes, teachers, firemen etc. Because HFTs employ a variety of strategies, such as front running orders, slow exchange arbitrage and others, that make sure orders are not executed at the best possible price for investors. They don't take any risk at all, other than "can they outrun a bunch of other HFTs, pay for all that access, and still make money at the end of the day". All in all, it's just a parasitic tax to the tune of ~10B a year or so, money from investor pockets, 401Ks to wall street guys'. if they shut down HFTs, they'll think of something else, they always do.

[Samseau]

(04-04-2014 02:58 PM)Lou pai Wrote:  

Samseau, you can trade more than 3 or 4 times a day as an individual if you have more than 25k in your account. It's called the pattern day trading rule.

HFT spend millions of dollars on technology but you think you should be able to log on to an etrade account and compete with them.

Also HFT firms do lose, a lot of them have gone out of my business in the past few years

So the rich have bought the stock market and now deserve to use the money to make more money in ways that no one else can touch?



I hope you do realize people with guns will eventually come and take it away.

[ElBorrachoInfamoso]

The HFT haters are just following the old "my pussy hurts" pattern that haters follow whenever someone comes along with a new and better method of doing something.

The finance types who were doing better under the old system are just throwing shit at HFT because anti-HFT (i.e. protectionist) policies would benefit them. They're like horse and buggy dealers hating on the new, unfair automobile.

The rest are just garden variety haters that pop up whenever someone makes a fair dollar off of their own ingenuity.

[Samseau]

(04-06-2014 04:05 AM)ElBorrachoInfamoso Wrote:  

The HFT haters are just following the old "my pussy hurts" pattern that haters follow whenever someone comes along with a new and better method of doing something.

The finance types who were doing better under the old system are just throwing shit at HFT because anti-HFT (i.e. protectionist) policies would benefit them. They're like horse and buggy dealers hating on the new, unfair automobile.

The rest are just garden variety haters that pop up whenever someone makes a fair dollar off of their own ingenuity.

Please, there is no legitimate moral argument one can make for most of the stock market, which is just gambling, or HFT, which is just scalping the profits of other people.

As this country slowly disintegrates, Wall St will be the first target for either a coup d'etat or angry hungry masses. The rich are always the first to go, while being completely arrogant about the situation they find themselves.

The rich always make it seem like they deserve the money they have, when in fact they got their money through 75% luck. The average dude won't really care when you're begging underneath his gunpoint, he's just gonna laugh, kill, and take the money.

Rich being killed for their money is the oldest story of man's history, so I fully expect it to happen again.

[scorpion]

(04-06-2014 04:05 AM)ElBorrachoInfamoso Wrote:  

The HFT haters are just following the old "my pussy hurts" pattern that haters follow whenever someone comes along with a new and better method of doing something.

The finance types who were doing better under the old system are just throwing shit at HFT because anti-HFT (i.e. protectionist) policies would benefit them. They're like horse and buggy dealers hating on the new, unfair automobile.

The rest are just garden variety haters that pop up whenever someone makes a fair dollar off of their own ingenuity.

This is not like that at all. HFT is not making a fair dollar with an exciting and productive new business idea, it's an entirely parasitical and under the radar activity.

The best analogy to HFT would be if some company was able to hack into the SpeedPass readers on toll roads and start siphoning out an extra penny from each driver who went through. That's not "making a fair dollar off their own ingenuity." It's fucking stealing. The fact that people didn't know their were being stolen from doesn't make it right.

[Cattle Rustler]

HFT guys are red pill, they have no qualms about crushing the weak and making the most they can in this capitalistic society. If I had an advantage, I would use it too and y'all would too.

Giving everyone an equal change sounds pretty feminist.....not to mention your average joe will think he's George Soros and burn his account through a day trying to game the system.

There's no need to hate on the rich, guns are to be used for defense....not killing our job creators.

[scorpion]

(04-06-2014 11:19 AM)Cattle Rustler Wrote:  

HFT guys are red pill, they have no qualms about crushing the weak and making the most they can in this capitalistic society. If I had an advantage, I would use it too and y'all would too.

Giving everyone an equal change sounds pretty feminist.....not to mention your average joe will think he's George Soros and burn his account through a day trying to game the system.

There's no need to hate on the rich, guns are to be used for defense....not killing our job creators.

Here's my new business idea: every time you deposit a check at the bank, my automated software takes 1% of it and deposits it into my account.

If I can secure this advantage for myself, it's my prerogative to use it, regardless of how you feel about it.

Fuck yeah, job creation!

[Samseau]

(04-06-2014 11:19 AM)Cattle Rustler Wrote:  

HFT guys are red pill, they have no qualms about crushing the weak and making the most they can in this capitalistic society. If I had an advantage, I would use it too and y'all would too.

Giving everyone an equal change sounds pretty feminist.....not to mention your average joe will think he's George Soros and burn his account through a day trying to game the system.

There's no need to hate on the rich, guns are to be used for defense....not killing our job creators.

Job creation? What jobs? Things have barely changed since 2008. It's funny, really: things have been almost frozen in time since 2008. That is the textbook definition of a dying economy. The only new growth to our economy has come from printing insane amounts of money and giving to major banks, who then report record profits, which then gets translated into "GDP Growth."

Quote:

There's no need to hate on the rich, guns are to be used for defense....not killing our job creators.

You contradicted yourself. Killing tyrannical rulers is self-defense.

[The Lizard of Oz]

The development of HFT and of the algorithms that allow traders to interpret real-time order flow data in order to front-run them will be one of the reasons the US will decisively win its next major war (most likely with China). It will also be one of the reasons we will find nanotech cures for cancer.

This is because future wars as well as the capabilities of nanotech will largely be decided by the ability of algorithms to interpret vast amounts of data in real time and take action. HFT is pushing the envelope on these algos and there will direct and massive spillover into other areas such as military and medical technology. We are going to have smart missiles that are able to interpret real time data and adjust, as well as smart nanobots that can navigate the body and take real time action. All using concepts that are currently being developed on Wall St to squeeze the last $0.0001 out of every transaction.

People who whine about how Wall St in general and HFT in particular are "parasitic" are completely missing the point. The way that mankind has made progress in new technologies has always been under the most serious incentives and there are basically two kinds of these: winning wars and making money. We are in a period of few serious wars so making money is the pressure cooker which will generate the breakthroughs we need to make progress.

This is also why there is so much more juice in the financial sector. In earlier days the main technological breakthroughs had to be based on new materials and means of production so all the juice was in manufacturing and that was the main way to make money. Now in the information age the technological cutting edge is in being able to process and interpret large amounts of digitally presented information and this is why some of the smartest people have flooded into finance and Wall St -- it is where the computational equivalents of steam engines and transistors are being created under the fundamental pressure of trying to make money.

All these things make sense and the reason America has prevailed and come out on top again and again is that it has allowed the free flow of human and material capital to where it needs to go at any given time. The invisible hand is indeed far superior to the foolishness of intellectuals of all ages who arrogantly think they know everything and who tend to be exactly wrong at any given point in time about the most important things (the "best minds" of the time who would have quashed the Industrial Revolution if they had their way are the same people who now think finance is "parasitic" -- never seeing the forest for the trees).

[Cattle Rustler]

(04-06-2014 11:25 AM)scorpion Wrote:  

(04-06-2014 11:19 AM)Cattle Rustler Wrote:  

HFT guys are red pill, they have no qualms about crushing the weak and making the most they can in this capitalistic society. If I had an advantage, I would use it too and y'all would too.

Giving everyone an equal change sounds pretty feminist.....not to mention your average joe will think he's George Soros and burn his account through a day trying to game the system.

There's no need to hate on the rich, guns are to be used for defense....not killing our job creators.

Here's my new business idea: every time you deposit a check at the bank, my automated software takes 1% of it and deposits it into my account.

If I can secure this advantage for myself, it's my prerogative to use it, regardless of how you feel about it.

Fuck yeah, job creation!

Go ahead, do it. I'll be a dumbass if I use a bank with your software....but if I do, then I deserve to get played by the game.

[ElBorrachoInfamoso]

An interesting op-ed in the Wall Street Journal

High-Frequency Hyperbole
Beware of critics who are 'talking their book' about trading that lowers costs.

Quote:

A few nights ago, CBS's "60 Minutes" provided a forum for author Michael Lewis to announce that Wall Street is "rigged" and for the sponsors of a new trading venue called IEX to promise to unrig it. The focus of the TV segment was high-frequency trading, or HFT, an innovation now over 20 years old.

The stock market isn't rigged and IEX hasn't yet generated a lot of interest. In our profession, what we saw on "60 Minutes" is called "talking your book"—in Mr. Lewis's case, literally.

The onslaught against high-frequency trading seems to have started about five years ago when a blogger made a wildly exaggerated claim about one firm's HFT profits. Nowadays after any notable market event, and again last Sunday for no reason other than a book launch, the world gets bombarded with arcane details and hyperbolic assertions about HFT strategies. If you find the discussion overwhelming, we have some good news: The debate can be understood without knowing how equity orders are routed, matched or canceled.

Quote:

Our firm, AQR Capital Management, is an institutional investor, primarily managing long-term investment strategies. We do not engage in high-frequency trading strategies. Here is where our interest lies: What is good for us is lower trading costs because it translates into better investment performance and happier clients, which makes our business slightly more valuable.

How do we feel about high-frequency trading? We think it helps us. It seems to have reduced our costs and may enable us to manage more investment dollars.

Quote:

Much of what HFTs do is "make markets"—that is, be willing to buy or sell stock anytime for the cost of a fraction of the bid-offer spread. They make money selling at the offer and buying at the bid more often than they have to do it the other way around. That is, they do it the same way that market makers have done it since they were making markets in Pompeii before Mount Vesuvius halted trading one day. High-frequency traders tend to do it best because their computers are much cheaper than expensive Wall Street traders, and competition forces them to pass most of the savings on to us investors. That also explains why many old-school Wall Street traders hate them.

Quote:


Some of the loudest complaints about high-frequency trading come from the slower traders who used to win the races.

Quote:

How HFT has changed the allocation of the pie between various market professionals is hard to say. But there has been one unambiguous winner, the retail investors who trade for themselves. Their small orders are a perfect match for today's narrow bid-offer spread, small average-trade-size market. For the first time in history, Main Street might have it rigged against Wall Street.

[BIGINJAPAN]

Anybody defending HFT doesn't know what they are talking about and have clearly never traded at a high level before... It is not just front running large block orders of trades, it is QUOTE STUFFING as well... But most of you wouldnt know that because you dont know what LEVEL 2 quotes are... If you used those like real traders do you would see the game that the HFT's play and how they MANIPULATE the market.

HFT is two fold illegal. First and foremost they are STEALING money... They are NOT providing liquidity in any fashion... Most of the trades they make they DONT use any of their own money... The trades happen so fast that none of their money leaves their account... So please explain to me defenders of HFT's how they provide liquidity when there is no money exchange and they are just siphoning cash ? They are in reality taking liquidity out of the market. And secondly if you watch a LEVEL 2 quote screen in action you will understand QUOTE STUFFING in about 10 seconds... They manipulate the market in order to front run big block trades... They also use the term SPOOFING as well.

[Samseau]

(04-06-2014 11:48 AM)ElBorrachoInfamoso Wrote:  

The onslaught against high-frequency trading seems to have started about five years ago when a blogger made a wildly exaggerated claim about one firm's HFT profits.

That's a shout out to ZeroHedge. God bless them

Quote:

How do we feel about high-frequency trading? We think it helps us. It seems to have reduced our costs and may enable us to manage more investment dollars.

"We think"
"It seems"
"may enable"

So in other words, they have no idea what they are talking about. Why are they defending it then?

Quote:

Much of what HFTs do is "make markets"—that is, be willing to buy or sell stock anytime for the cost of a fraction of the bid-offer spread. They make money selling at the offer and buying at the bid more often than they have to do it the other way around. That is, they do it the same way that market makers have done it since they were making markets in Pompeii before Mount Vesuvius halted trading one day. High-frequency traders tend to do it best because their computers are much cheaper than expensive Wall Street traders, and competition forces them to pass most of the savings on to us investors. That also explains why many old-school Wall Street traders hate them.

^ The above is just guesswork. In reality, HFT might just be stealing trades right under from people's noses because HFT is faster.

Quote:


Some of the loudest complaints about high-frequency trading come from the slower traders who used to win the races.

No doubt about this. But all in all, I agree with Scorpion that most short term trading is useless speculation that turns Wall St into a casino.

Quote:

How HFT has changed the allocation of the pie between various market professionals is hard to say. But there has been one unambiguous winner, the retail investors who trade for themselves. Their small orders are a perfect match for today's narrow bid-offer spread, small average-trade-size market. For the first time in history, Main Street might have it rigged against Wall Street.

The above quote is by far the most ridiculous; not only has Wall St. been reporting record outflows (the largest in history, in fact) but volume of trades has been on a non-stop decline since 2008.

http://finance.yahoo.com/echarts?s=%5EDJ...I;range=5y

^ Look at the volume of the Dow before and after the boom years, basically the retail investor is going extinct.

The average volume of trades during the boom years was 250K; today you're lucky if you can push 150K.

Come on man, you're in denial.

[Peregrine]

(04-06-2014 11:47 AM)Cattle Rustler Wrote:  

(04-06-2014 11:25 AM)scorpion Wrote:  

(04-06-2014 11:19 AM)Cattle Rustler Wrote:  

HFT guys are red pill, they have no qualms about crushing the weak and making the most they can in this capitalistic society. If I had an advantage, I would use it too and y'all would too.

Giving everyone an equal change sounds pretty feminist.....not to mention your average joe will think he's George Soros and burn his account through a day trying to game the system.

There's no need to hate on the rich, guns are to be used for defense....not killing our job creators.

Here's my new business idea: every time you deposit a check at the bank, my automated software takes 1% of it and deposits it into my account.

If I can secure this advantage for myself, it's my prerogative to use it, regardless of how you feel about it.

Fuck yeah, job creation!

Go ahead, do it. I'll be a dumbass if I use a bank with your software....but if I do, then I deserve to get played by the game.

If I stick a gun in your face demanding money while you were minding your own business, you have no right to complaint. I am strong and you are weak. I have a situational advantage against you and am leveraging it to my best ability. Agree?

(In all fairness, I used to have a similar view as yours.)