Seems more pointless than crypto to be honest.
Likewise with crypto. Personally I don't think that if you're calling an API over an Internet it matters if your trading bot is written in go or python (mine was in python). Use the language you're most comfortable in. The network and trade submission/execution at your broker will be 10x slower than your bot anyway. Unless the size of your operation approaches the size where you can get direct market access which seems to be reserved for big forms only.
That's just it. The whole premise is pretty absurd. The market, the actors, everything. It's so far removed from literally anything remotely human. It's the financial equivalent of an infinite sea of AI bots producing CVs and research papers which are only being evaluated and read by other bots.
If you step away from it all for a second, what the hell is the endgame of this whole hustle.
Anytime you create technology that sufficiently replicates the creators, you end up with the spirit of the creator embodied in the technology. So, of course digital brains are going to do weird things like crossword puzzles and sodoku at scale, because it's the same kind of useless shit we do to entertain ourselves.
You get into this conversation whenever you dive hard into cyberpunk, which is so many, many things. Even the Internet itself started out that way. The endgame started as a game, and it will end up being a game, played by our creations as odd mirrors of their creators.
I think there's a lot of people who subscribe to doing the same thing to save the planet, of which I have a keen interest. Solarpunk is the name of that movement, and it also has similar crazy ideas.
We're inventing digital brains. It's literally an architecture designed to be removed from being anything remotely human as it's a mimic or replacement technology for intellectual capacity.
If you really take a step back, the endgame is crazier than just bots producing content merely for other bots to consume (which basically describes the vast majority of scientific papers these days too, ironically). When you take that absurdity and multiply it by tens of thousands in terms of efficiency, the whole system we're building looks WILD and almost inconceivably strange to the way we do things now.
I know this is only tangentially related, so I appreciate your understanding that I already understood that and wrote this anyways. :)
In the old days before HFT, you weren't sure you'd get the best price. You'd have to rely on a broker to make sure that happens, but as a retail trader you generally got a worse price/out of date price.
Nowadays with HFT you can get pretty much the best price anywhere. Those <1ms HFT traders make that happen. It's the efficient market hypothesis in effect, made possible by HFT.
Now is it pointless to shave off even more ns in the all out war to grab a piece of the order flow? For retail and institutional investors, at a certain point, yes it's completely pointless.
But it's also just pure capitalism at work. HFT firms compete against each other, and the competition is about speed to provide the best price and volume. If you try to regulate with something like enforced delays, then what do you compete on instead?
Capitalism necessitates efficient markets (and efficient markets necessitate HFTs) so any criticism of HFTs is a direct criticism of capitalism as well. I mean this isn't really a problem that's specific to HFTs -- there are just a lot of jobs that we can perceive as providing no value or even negative value (jobs that are possible specifically due to capitalism e.g. payday loans, 2008 style trading, certain scams or predatory practices etc.)
I think we can all agree that this is a flaw, and we're not criticizing capitalism to replace it with something else, but rather just recognizing this as a problem. At the end of the day, a useless job is a useless job even if it exists solely because of capitalism.
People are saying this because, HFT sounds similar to 'crypto mining'. That's people with best infrastructure, the 'big-guys' -- win. While leaving out the retail investors as broiler chicken, pumped with 'drugs' (by influencers) to spend more on imaginary assets, so that they can be used for 'food' by these 'big-guys'.
There are different influencers for retail investors vs crypto. In retail investing there are promises of 'retirement paradise', actual tax deductions, the Jim Cramer-like people (at least what I heard in US)
For crypto investing the influencer are different, the geography is wider. A promise to participate in markets if you do not live the country that has adopted US/UK-based financial services.
- - - By the way, I think the markets will still have liquidity if there is a rule to wait, for say, 30 min before a stock that was just recently bought -- can be sold (unless by a clear fat finger mistake)
This rule will cause the HFTs to stop existing in the current form.
Do any regular pedestrian middle class retail investors EVER actually earn enough to retire on? Or do anything meaningful with? If so.. what is THEIR secret sauce, since it's not HFT...
a)Members of political elite that get insider trading stock tips. (illegal of course). The number of folks in usa congress and senate that become 'very lucky' investors after they join the rank, has to be amazing
b)Lucky
c) everybody else -- that looses.
Overtime, I would say last 30 years, the amount of 'influencing' retail investors to trap them into unreasonable actions had gradually increased.
So the percentage of folks going becoming the victims of the charade, will become higher.
Certainly if you concentrate on ( b ) you create the plausible deniability defense for the manipulators
You are profiting off workers as a middle man in the economy by doing HFT, and trying the justify it by some vague concept of the "correct price". You are producing nothing of value, merely taking away value before someone else notices it is there.
Our entire economy runs on "middlemen". Convenience has huge value to most people.
It's a bit like stock brokers - and why wouldn't we want stock brokers to operate at drastically faster-than-human timescales, because we all know the value of a company changes every nanosecond! And "flash crashes" create opportunities for investors to make huge amounts of money!
And just as crypto has poured money into GPU companies (providing opportunities for enterprising secondary market resellers of same) HFT has poured money into networking companies.
Short of creating the great firewall or helping governments slurp up all the traffic on the internet, what could be a more beneficial application of network technology?
HFT (like finance in general) has also gobbled up lots of tech grads, making it easier to find jobs at tech companies.
Now when I say the same thing about index funds people get all huffy
Regarding liquidity, I imagine it's possible that the index fund might allow you to withdraw money faster than you could sell on your own, but realistically I kind of doubt it.