Absolutely nothing:

Source: Nanex

Source: WSJ

Stock Market’s Fake-Tweet Retreat

Source: MarketWatch


video after the jump



HFT (Huh!) Good Gawd Y’all What is it Good For? Absolutely Nothing Say it again! (Huh!) Listen to me. Hey!

Category: Really, really bad calls, Regulation, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “HFT: What Is It Good For?”

  1. cynical says:

    In all seriousness – what is day/week/month trading good for? The “fast money” guys on CNBC – what do they add? Why can you trade 1m options – does a multi-billion multi-national company’s prospects really hinge on a month? The entire market is rigged for short-term trading and everyone is shocked that short-term trading happens. Really? Btw short-term 1/2 second or less or 1- day/week/month is all basically the same thing. Why not just go back to once a day or even once a week auctions? Liquidity has always been a myth. And “liquidity” encourages short-term trading b/c you believe you can get out (or should be somehow entitled to). No one buys a large real estate property like an office building or some other illiquid asset simply for the pricing swing (home flippers add value via their remodeling service). They are truer long-term investors exactly because there isnt liquidty to flip something or to front run someone.

    It is a casino. The long-term Warren Buffet type of investors did not get hurt or helped yesterday. It was noise where one really fast trader is running over/getting run over by another trader. Whoop-de-do. And one class of short-term investor should not be favored over the other simply because one is winning and the other losing. Let ‘em gamble.

  2. ironman says:

    Definitely a weird day for the markets….

  3. [...] The Big Picture, HFT: What Is It Good For? here. Subtle War == HFT equivalence argument. And he manages other people’s assets. HFT (Huh!) [...]

  4. theexpertisin says:

    Perhaps there is something to the thought that periods of silence and meditation are much more valuable than social media chatter.

    Meditation can light up a great idea. Social media dulls more than inspires.The lies and distortions that prevail in this medium are not worth the time wasted with our one pass on earth.

  5. BigSpooky says:

    So midday, when the volumes are lowest, people – note *people* – decide to sell some $20billion notional of eminis and because the market dips this is somehow the fault of HF not providing unlimited liquidity? One has to wonder how a human-centric market making system would have handled this. I’m guessing either a) once the book was blown through they would have halted or b) MM would have said “I have no idea whats going on” and we would have dipped much further to compensate for the risk-of-unknown. If there is a fault of computer algos their tendency to make mean reversion bets in these types of situations is oftentimes way too high, but thats the liquidity people are looking for.

    Oh, and lets not forget that the vast majority of HF trading is providing algos for much more traditional types of asset management – providing vwap etc. The $ amount of money in direct prop HF trading that you are asking to provide a liquidity buffer against the gigantic midday flows is actually quite small.

  6. gman says:

    Considering the magnitude of the story and the apparent credibility of source, the move was actually UNDERSTATED.

  7. DeDude says:

    Nothing that couldn’t be fixed with a big fat tax on every offer, bid and trade.

  8. louiswi says:

    DeDude is absolutely correct. A tax, at the very least on the trade, would provide the necessary friction to allow this machine to function in a manner other than a casino.

  9. farmera1 says:

    Look on the positive side. Lots of money made in war, those that stay out of war and stay on the farm get rich. The weapons makers get rich. The schemers and fraudsters get rich.

    You got to look at HFT as the VIG. It’s the cut that all of those schemers and fraudsters skim off the top.
    So some get rich. Now what is wrong with that????????? You know the job creators. The 1% ers.

    More to the 1%ers. It all (war and the HFTer’s VIG) all remind me of the clang bird. It flies in ever decreasing concentric circles until it flies up its own ass with a resounding CLANG.