There's liquidity until there isn't. It was easier to get an order filled during a run to the exit pre-HFT. When everyone runs to the exit in an HFT world, retail investors are the last to get their orders filled, if they're lucky.
But, to the extent that you believe the argument that HFT is essentially front-running, then HFT gets the tight spreads and better pricing.
Market makers aren't agents of traders.
Sure. That's why I wrote "essentially" front-running. Perhaps I should have written "effectively" to better clarify?
In any case, I am referring less to the tort and more to the common complaint that people have about HFT: WRT how it disadvantages small investors.
>People believe all sorts of weird things
Indeed. But, I don't believe that to be an esoteric complaint. In fact, it seems to be one of the chief complaints where HFT is concerned.
That is true. But: it is not.
Lots of people also believe that high-end market research (for instance, targeted research and maybe even electronic surveillance about how many widgets a company has sold) is a form of insider trading. But: it is not, even though lots of people say that, and for the same reason.
In both cases, people believe there is something shady about people going to extraordinary lengths to obtain a trading advantage. And, in both cases, not only is the market resilient to those efforts to gain advantage, but the markets are theoretically improved by them. The point of a market is to expediently arrive at the best (as in, most reflective of intrinsic value) price for something, and to make it efficient for people to buy and sell at that price.
I am also aware of the arguments in favor of HFT. As you stated, the oft-made claim that the market is improved is theoretical as well; hence, is also a product of "belief".
It's not a settled question. [0]
>The point of a market is to expediently arrive at the best (as in, most reflective of intrinsic value) price
Yes.
[0] https://www.investopedia.com/ask/answers/09/high-frequency-t...
You can disagree that these are things worth optimizing (though if you weren't careful you'd risk arguing in some sense against the premise of a market), but it's less clear to me how you'd argue that the causality is other than what my argument says it is.
See the previous link I posted. Also, of course, "Flash Boys" by Michael Lewis. There is no shortage of discussion around this question.
Regarding Flash Boys: I don't know of a single person who works in trading who has stuck up for that book. I strongly recommend "Flash Boys: Not So Fast", which debunks it but is also much more interesting from a technical perspective than Lewis's book.
Never said that.
We seem to be having trouble communicating. It happens. Thanks for the discussion.