Could this be what HFT's are doing to the market? | Forex Factory

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Could this be what HFT's are doing to the market?

  • #1
  • First Post: Sep 5, 2013 2:31pm Sep 5, 2013 2:31pm
http://m.afr.com/p/national/the_gamb...XaVFjmpyYXNu9J

I mean think about it..

To trade at break even is surely much easier than trying to trade at profit.. If I approach a broker and say I have 3 billion of volume to put into the market every day but I want to get compensated 5% for losses otherwise I'm taking my business elsewhere..

Then strike the same deal with another few brokers... Short at one broker long at another.. In and out all day for break even trades , meanwhile raking in rebates on the losing trades at everyone elses expense... The only quest therefore is to beat the spread safely.. Which can be surely be done with a few gimmicks not privy to the normal trader.. derivatives contracts as well

Makes you wonder..

(sorry to make yet another thread, but interesting I feel and well worthy of discussion)
Time hides Nothing
  • #2
  • Sep 5, 2013 4:27pm Sep 5, 2013 4:27pm
Quoting CindyXXXX
To trade at break even is surely much easier than trying to trade at profit.. If I approach a broker and say I have 3 billion of volume to put into the market every day but I want to get compensated 5% for losses otherwise I'm taking my business elsewhere..
If you want to draw a parallel with the story then that would have been a broker that charges 6+% in commissions. Contrary to your assumption, it is not easy to trade at break even with such a broker.
  • #3
  • Sep 5, 2013 4:30pm Sep 5, 2013 4:30pm
Quoting CindyXXXX
http://m.afr.com/p/national/the_gamb...XaVFjmpyYXNu9J I mean think about it.. To trade at break even is surely much easier than trying to trade at profit.. If I approach a broker and say I have 3 billion of volume to put into the market every day but I want to get compensated 5% for losses otherwise I'm taking my business elsewhere.. Then strike the same deal with another few brokers... Short at one broker long at another.. In and out all day for break even trades , meanwhile raking in rebates on the losing trades at everyone...

well they are not doing anything new.......what HFT are doing right now has been done by human from decades ....be it a rebate trading or latency arbitrage or front running etc.....
It used to be done by specialists of pits but when computer driven technology came out they went out of the business.
HFT had a clear advantage of SPEED than human. But now even most of HFT firms are not making money because they have cut throat competition between them, there will always be a better option to access faster information than others.

So, in a way they make money doesnt conflict with retail traders...instead i believe cost of trading has gone down because of HFTs....Only thing you can argue about is Front running....but its still better than Inside trading done by big hedge funds , banks and corporation.
  • #4
  • Sep 5, 2013 4:33pm Sep 5, 2013 4:33pm
Quoting ronaleo10
{quote} well they are not doing anything new.......what HFT are doing right now has been done by human from decades ....be it a rebate trading or latency arbitrage or front running etc..... It used to be done by specialists of pits but when computer driven technology came out they went out of the business. HFT had a clear advantage of SPEED than human. But now even most of HFT firms are not making money because they have cut throat competition between them, there will always be a better option to access faster information than others. So, in a way...
Arbitrage is still profits... I'm talking B/E on the trading front but profits paid out of the brokers profits for rebates, which of course does not come out of thin air.. Guess who pays the commission.
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  • #5
  • Sep 5, 2013 4:38pm Sep 5, 2013 4:38pm
Quoting Ltc.Data
{quote} If you want to draw a parallel with the story then that would have been a broker that charges 6+% in commissions. Contrary to your assumption, it is not easy to trade at break even with such a broker.
yeah the spread makes it difficult
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  • #6
  • Sep 5, 2013 5:34pm Sep 5, 2013 5:34pm
Quoting CindyXXXX
{quote} yeah the spread makes it difficult
No you still can make money with spread.

But Rebate trading works on " The volume you trade, the frequency of your trading ".
Now as you said you strike a deal with two different broker ,,, offering high volume.
Going long at one and going short at other....in theory you will be break even + rebate - spread = profit ( because you trading high volume , spreads very low and certainly reduce profitability but doesn't offset it.

Now in practice when you try to do this lets say for example you put 1000 lot order on both side of the market at same price...but depending on order books...lets say there is a bank who wants to buy 1000 lot you are selling at 1.30 , but there is a no seller at 1.30 and you want to buy 1000 lot ..price will go up until your demand is met.

you will lose money by selling low and buying high....there is still risk involved.

HFT can able to do it by pinging technique and algo trading spotting algorithms ...so they knows that they will be able buy and sell at the same price , earning rebates.

But as i said earlier SPEED is the advantage , it costs them lot to achieve that and has to be always on there toes to maintain that and find new one.

For us retail trader its not possible , we can only remove variable SPEED from our trading and HFT's wont be much problem to us.
  • #7
  • Sep 5, 2013 5:42pm Sep 5, 2013 5:42pm
Quoting ronaleo10
{quote} No you still can make money with spread. But Rebate trading works on " The volume you trade, the frequency of your trading ". Now as you said you strike a deal with two different broker ,,, offering high volume. Going long at one and going short at other....in theory you will be break even + rebate - spread = profit ( because you trading high volume , spreads very low and certainly reduce profitability but doesn't offset it. Now in practice when you try to do this lets say for example you put 1000 lot order on both side of the market at...
Yeah, so you;re basically selling your liquidity in effect.. Of course retail traders can not do this I wasn't suggesting this as a trading system.

But it takes the piss of the markets, and should be outlawed.. If I'm long and short in and out then all I've done is provide liquidity to myself just for some rebate..

I haven't offered genuine liquidity to the market... I've counted that by hedging my own position.. No one will complain because the person doing it is getting rich and the broker(s) earn their spread. Meanwhile the markets are looted. It's BS
Time hides Nothing
  • #8
  • Sep 5, 2013 6:18pm Sep 5, 2013 6:18pm
Well this game was never made to be fair.
The view of the world depends on from where we are standing.
For us retail trader we assume that they make risk free money.

Anyway if you haven't read this article , you should it will make you happy.
http://www.businessweek.com/articles...se-and-fall#p1
  • #9
  • Sep 5, 2013 6:26pm Sep 5, 2013 6:26pm
Quoting ronaleo10
Well this game was never made to be fair.
True true, but it was made for a purpose that is none served by this practice...

Anyway.. Not trying to start a revolution. I just find it completely frigging awesome for the ones taking advantage, but of course envious as the one of the ones possibly being affected negatively by it..

Whatever the case it is interesting, and weirdly inspiring
Time hides Nothing
  • #10
  • Edited 6:47pm Sep 5, 2013 6:36pm | Edited 6:47pm
Quoting CindyXXXX
{quote} Yeah, so you;re basically selling your liquidity in effect.. Of course retail traders can not do this I wasn't suggesting this as a trading system. But it takes the piss of the markets, and should be outlawed.. If I'm long and short in and out then all I've done is provide liquidity to myself just for some rebate.. I haven't offered genuine liquidity to the market... I've counted that by hedging my own position.. No one will complain because the person doing it is getting rich and the broker(s) earn their spread. Meanwhile the markets...
HFT has been within the system since HFT was introduced. Totally "fixed" from the start. ( early 1970's....automated computer programmed trading ).

The game is to see it and trade it .

You appear to be trying to put people "off" trading ; claiming that a new element has entered the arena. ...No , HFT has always been around.

If you see something new , please , do let us know.

http://gyazo.com/837df095cbe75f4b25e90f66044c19d6
All systems of divination, like music itself,work through patterns.
  • #11
  • Sep 5, 2013 11:23pm Sep 5, 2013 11:23pm
Brokers are in the business of making money, not losing. If trading to BE to gain rebates ever worked it was only briefly.
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #12
  • Sep 6, 2013 12:17pm Sep 6, 2013 12:17pm
I read in dark pools a special type of order that's unseen,and is given priority over other order types ( limit) basically the algos can never lose coz they always offset their losses by being in front of the queue.They play for B.E or for rebates.They can never lose.
This is the holy grail.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #13
  • Last Post: Sep 6, 2013 11:28pm Sep 6, 2013 11:28pm
Quoting pemully
I read in dark pools a special type of order that's unseen,and is given priority over other order types ( limit) basically the algos can never lose coz they always offset their losses by being in front of the queue.They play for B.E or for rebates.They can never lose. This is the holy grail.
Dam Straight... Thanks for the educated reply
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