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Valyooo (99.63)

If you complain about HFT computers, you're not cut out

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22

August 11, 2011 – Comments (29)

Why does everybody complain about these devices?

If you're an "investor" that loves Buffett and Lynch, you should be living by the "hey what do I care if the market dips lower, I like buying my companies cheaply"/

If you're a trader you should love the volatility.

If you know how HFT works, then use that knowledge to your advantage.

If you don't, read up on it.

I see nothing wrong with HFT computers...if you don't like the game, get out...nobody would be complaining if HFT drove the markets up like crazy.  For some reason, shorts are evil and longs are great people.

Its all two sides of the game.  Unless you are the invesrment bank taking the company public you are not infusing capital into a company.

 

What exactly is the problem?

29 Comments – Post Your Own

#1) On August 11, 2011 at 11:17 PM, Valyooo (99.63) wrote:

Same goes for 3x ETF.  If you know how they work you know to use it only for a short time frame or on a huge move.

If you don't know how they work, shame on you for investing in something you don't understand.

Maybe we should ban casinos too since it's in the house favor?

Bears are way too cocky and cant admit when they are wrong, and bulls complain when the market tanks and blame traders and computers for the fact that they invested too much of their cash.

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#2) On August 11, 2011 at 11:30 PM, VExplorer (30.48) wrote:

nobody would be complaining if HFT drove the markets up like crazy

we already have seen this happen again ang again ;)

+1 rec

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#3) On August 11, 2011 at 11:33 PM, Momentum21 (96.33) wrote:

#1 - everyone knows how a casino operates. leveraged ETFs are pretty complicated instruments that may or may not deliver advertised results. 

Guys like you were saying the same thing about CMBS loans back in the day. As long as someone buys the paper it's all good, right? 

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#4) On August 11, 2011 at 11:37 PM, Valyooo (99.63) wrote:

Leveraged ETFs are not that hard to figure out.  Even if you don't understand how they are structured it takes 5 minutes to read an article about how rebalancing works.

For what it's worth yes I agree on CMBS...the guys who shorted made a lot, the guys who long lost....theres two sides of every trade.

For the sake of my point though, it's completely different.  That was the real economy....this is just the stock market.

Complaining about HFT is like complaining that you are not smart enough to figure out a game that you choose to play...no complaints when you are winning, funny.

 

When stocks break out of a range, HFT get destroyed...they are not indestructable.

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#5) On August 11, 2011 at 11:39 PM, Valyooo (99.63) wrote:

Also, if there is an uptick rule there should be a downtick rule as well.

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#6) On August 11, 2011 at 11:47 PM, HarryCarysGhost (99.76) wrote:

Hey, Valyooo.

First off- Whassuuuup!

Second off- That's fine for someone like you or I, but it really screws the person just investing in their 401k, or gets their pension underwater.

Ya gotta admit man, that the GS controlled administration (on both parts I'm bipartison on calling all politicians A$$holes) has really hosed the American public.

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#7) On August 11, 2011 at 11:48 PM, VExplorer (30.48) wrote:

#3 For sure CMBS loans were good, at least for me. What another way I can outperform all these greedy lazy people? I have knew guy he is graduated by very prestigious US  University (after USSR diploma we both recieved). And after few years of sitting as "risk manager"  in TBTF investment firm he bought huge house in 2006 (his wife is proffesional realtor of course). The house lost 50% in value, but this guy is doing pretty well. So, there is a lot of room yet for improvement of the system. ;)

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#8) On August 11, 2011 at 11:50 PM, awallejr (82.72) wrote:

Complaining about HFT is like complaining that you are not smart enough to figure out a game that you choose to play...no complaints when you are winning, funny.

I complain about them up or down.  People should be running markets not machines.  And to say well since you can't keep up with those machines, the same machines who can past post you or front run you because they  can, you shouldn't be in the game is just wrong.  It's almost equates into saying who cares if people act on inside information.

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#9) On August 11, 2011 at 11:54 PM, VExplorer (30.48) wrote:

#6 That's fine for someone like you or I, but it really screws the person just investing in their 401k, or gets their pension underwater.

I satisfied how PIMCO Total Return is doing in my 401K. So, again, it is just matter of investing in what you understand. Stock is not only option. Unfortunately, Big Ben is killing alternatives .

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#10) On August 12, 2011 at 12:01 AM, VExplorer (30.48) wrote:

#8 Hey, it is NOT computers. It is PEOPLE who are programming strategies. You can have your own if you smatr enouth. Ten years ago I did some money by programming strategies for individual investors on platform of StrategyRunner. I'm not sure they are in business, but, probably, you will find platform for your HFT if you really smart. It is NOT exclusive club of big guys.

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#11) On August 12, 2011 at 12:09 AM, awallejr (82.72) wrote:

#10, it is still algorithms in the end, the same algorithms that caused the flash crash and hurt many an innocent investor, and the same algorithms that will continue to do so because they can.  You are right I don't engage in hft mainly because I am an investor not a trader.  But make no mistake the little guy has no shot in using them so it really is an exclusive club.

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#12) On August 12, 2011 at 12:12 AM, Valyooo (99.63) wrote:

If you are in a 401k, HFT does not matter because it does not effect long term price movements, just short term swings.

As for people should be running markets not machines...why?  Should we remove automation from other areas too? Computers are much faster than market makers.

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#13) On August 12, 2011 at 12:13 AM, HarryCarysGhost (99.76) wrote:

, VExplorer

So, are you taking a let them eat cake attitude. How many average Americans even know what HFT stands for?

Are you comfortable gaining riches over the blood of your fellow man?

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#14) On August 12, 2011 at 12:13 AM, TheDumbMoney (42.99) wrote:

I think this is a straw man.  I don't think very many people in the markets are worried about this.  It's just a political issue following the Flash Crash.  I also don't think HFT hurts small investors at all on a trade-by-trade basis.  I think it probably lowers spreads and I think for a long term investor any added cost (unlikely in any event) is essentially irrelevant. 

Not only that, I actually doubt that it adds a ton to volatility.  What's your source that it does???   Things weren't calm for much of this year because HFT took a holiday.  And things haven't been volatile recently because of HFT.  HFT is a very good way to BENEFIT from volatility, but it doesn't create volatility.  That little thing inside our skull creates volatility, and our adrenal glands, and a pile-up of bad or good news that we suddenly decide means something after ignoring it for awhile during the pile-up.

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#15) On August 12, 2011 at 12:14 AM, Valyooo (99.63) wrote:

So you WANT a rigged market?  Removing peoples choice of using algorithm's = rigging the market for your personal preference.

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#16) On August 12, 2011 at 12:20 AM, awallejr (82.72) wrote:

As for people should be running markets not machines...why?  Should we remove automation from other areas too? Computers are much faster than market makers.

That would be apples to oranges.  The market, in theory anyway, should be an even playing field, otherwise it loses its credibility and can ultimately do more harm than good.  And right now the little guy is running from the market and I submit it will take a long time before they start to return.  They are starting to see it as a rigged game now, and I submit if you could poll people most would vote that way.

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#17) On August 12, 2011 at 12:22 AM, VExplorer (30.48) wrote:

#11 But make no mistake the little guy has no shot in using them

Why? I see most advantages on side of  "little guy". It is not easy "to be predator", but "to be BIG predator" it is virtually imposible. "Carps" always are growing bigger as it is easier to be big and lazy.

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#18) On August 12, 2011 at 12:35 AM, VExplorer (30.48) wrote:

HarryCarysGhost Are you comfortable gaining riches over the blood of your fellow man?

Till it is in line with law, it is OK for me. I hope Americans are remembering yet "they are people of law". Any another system is just ugly, I experienced it. BTW, I my experience poors much more gaining over "blood" of riches. Riches just not going to die from it as big creatures are not going to die becouse of parasites (if there are not to many of them).

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#19) On August 12, 2011 at 12:43 AM, HarryCarysGhost (99.76) wrote:

So basically this is an argument that people who don't know what they're doing should'nt be in the market.

O.K I'll agree with that, the amount of manipulation that goes on is no place for someone weak of heart.

Gotta admit that's a sad state of affairs, won't be to long that were considered a part of some fruity little club.

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#20) On August 12, 2011 at 12:45 AM, Momentum21 (96.33) wrote:

VExplorer (47.28) -The crazy thing is that people will continue to believe that they can play the game like they read about...the little guy is lazy. They want to take down the big pots with bold bets...the big guy understands the odds and simply plays small wins with high frequency. They just aggregate the poorly played bets to supplement their income from fees from the big clients. 

WTF with this Carp analogy? 

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#21) On August 12, 2011 at 12:52 AM, mtf00l (43.58) wrote:

"manipulation" sounds like the operative word...

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#22) On August 12, 2011 at 12:55 AM, mtf00l (43.58) wrote:

Additionally, it's too bad the market has become not much more than a "game".

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#23) On August 12, 2011 at 1:24 AM, L0RDZ (84.26) wrote:

Wow  do they really need  to rig the system  more ???

HFT  should be removed...   the playing field should not have  machines  micro seconds  away  while  the ordinary are  minutes  away  at best...

Ever hear of  front  running...  stuffing the box  and than taking away  bid and ask  even before the others can react.

sad,..

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#24) On August 12, 2011 at 9:34 AM, VExplorer (30.48) wrote:

Momentum21 WTF with this Carp analogy?

Carp is a lazy giant in North America lakes. BTW: carps are not Native and very-very smart. Most lakers see carp as invasive spice as if carps are going dominate (and they are going dominate pretty quick) lakes are going shallow and muddy. Eco system is disbalancing. Pikes and Basses are disappearing. Lake is becoming swamp, but carps are prospering in that environment. Can you see analogy with market?

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#25) On August 12, 2011 at 10:19 AM, Frankydontfailme (27.20) wrote:

Ok. Nothing wrong with HFT in and of itself. There is a problem with the Ibanks who run HFT because they also have a share in the communication's company that integrates the bid/ask and reveals to the Ibanks the bid/ask before the order goes in. They can then insert a bid and pull it away to manipulate a price to favor their current of future position. This is stealing.  No different from switching the tags on a pair of jeans (just a lot faster).

To reiterate, nothing wrong with computers and HFT in and of themselves. Using them to manipulate the market is wrong and it is stealing. Maybe it has no long term affect, maybe it does. Who cares? Stealing is illegal.

 

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#26) On August 12, 2011 at 11:01 AM, VExplorer (30.48) wrote:

Frankydontfailme I agree with you. Stealing is illegal. I've believed in justice in US yet. So, If you or somebody else will have proved info about these kind of operation they can sue broker.

Actually, it isn't easy to perform these kind of operation. BTW: how you see it? Online broker is recieveng your request, transfering it to lbank for processing and hold it a little bit before send to NASDAQ server, that time HFT software of  lbank is making decision and sending his request to NASDAQ server before your original isput in query, Is it right? It is very difficult to hide this process. I don't believe "transfer of data between broker and lbank" exists. If it isn't present and HFT software of lbank just analysing actual query which already sit on NASDAQ server, no stealing here. You can do the same. NASDAQ server keep query in line with rules (available for public). Otherwise, it is a crime. Probability of it close to zero. So, in general case lbank has had just intellectual advance over you. It is NOT crime.

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#27) On August 12, 2011 at 2:04 PM, Frankydontfailme (27.20) wrote:

http://www.zerohedge.com/article/goldman-finally-discloses-true-intentions-vis-vis-dark-pools-sec-now-actively-opposes-these

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#28) On August 12, 2011 at 2:36 PM, VExplorer (30.48) wrote:

Frankydontfailme I'm familiar with this stuff. IMO: no advantages for big players. Yes, they have had faster computers (you can have your own, just pay for it), they have had faster access to servers (you can have your own, just pay for it). They spend a lot of money to create and to keep it running. After that they sold to their shareholders idea they have had advantage and recieved bonuses. This is their business. I did not recieved bonuses, but I had piece of pie (few software development contracts). And for myself I have had conclusion: no advantage, just BS for laze people who are looking for easy profit from nothing ("magic formula"). So, don't affraid from this. Think and trade. Be carefull and always remember "marging kills".

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#29) On August 12, 2011 at 6:00 PM, ChrisGraley (30.25) wrote:

Computers can't think. (at least not yet)

You have to define for a computer that "if this happens then do this".

This is a fundamental flaw of HFT.

You have to define the event before it actually happens.

You can not take all possibilities into account with software.  

There will be a time when the HFT computers are going to be opposite of the market and a major trading firm will be out of a lot of money because of it.

The fact that it trades so fast means that you will lose a ton of money before you figure out that it's broken. 

If I'm a hedge fund manager right now, I'd be studying HFT more than I'd be studying stocks.

You only have to outsmart the cash machine once to define an entire career. You don't have to outsmart all the machines, just one machine.

It's like the old lady in Vegas with the nickle on a string milking the slot machine dry. 

 

 

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