There are a many of news articles and youtube videos which present HFT as a bad thing.
Since large orders are filled by different markets, anyone who has studied the mechanisms via which these orders are full-filled can theoretically arrive at a strategy that might be profitable.
Overtime, more and more people will learn these things and it will no longer be a profitable strategy to implement - this is sort of like the "January Effect" described in the book named intelligent investor.
I don't understand why HFT has to be blamed for a difference in prices across multiple markets. I read somewhere that REGNMS caused market fragmentation and HFT traders spend time studying the current markets and identify inefficiencies that can be used to make profitable trades.
This Reuters article is like an advertisement for the IEX trading platform. IEX figured out a certain way to beat the other algorithms and they told Reuters about it. Now that everyone knows it, I think, pretty soon other algorithm developers will modify their implementations.
Overall, I think that HFT is basically algorithmic trading, but which needs more investment (for renting/buying server/connectivity) and more time/interest (for studying and understanding the order placement/fulfilment mechanisms involved).
It's not that HFT is to blame for differences between markets, but that differences between markets plus the market structure are to blame for (the socially wasteful bits of) HFT.
Since large orders are filled by different markets, anyone who has studied the mechanisms via which these orders are full-filled can theoretically arrive at a strategy that might be profitable. Overtime, more and more people will learn these things and it will no longer be a profitable strategy to implement - this is sort of like the "January Effect" described in the book named intelligent investor.
I don't understand why HFT has to be blamed for a difference in prices across multiple markets. I read somewhere that REGNMS caused market fragmentation and HFT traders spend time studying the current markets and identify inefficiencies that can be used to make profitable trades.
This Reuters article is like an advertisement for the IEX trading platform. IEX figured out a certain way to beat the other algorithms and they told Reuters about it. Now that everyone knows it, I think, pretty soon other algorithm developers will modify their implementations.
Overall, I think that HFT is basically algorithmic trading, but which needs more investment (for renting/buying server/connectivity) and more time/interest (for studying and understanding the order placement/fulfilment mechanisms involved).