Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
I made no such generalization but was talking about a specific example of queue-jumping.
I actually differentiate between trading activities and believe that some have social value, like true risk taking, true market making and provision of real liquidity, actual arbitrage.
Whereas other activities I think are detrimental, for example any abuse of exploits, queue-jumping, front-running, excessive cancellation to fill ratios (wanting to get something for nothing), quote-stuffing, spoofing, layering, market manipulation, insider trading.
I find it interesting that you use the word "dominated". I know that it is in terms of speed.
Now if I dominated a "trading space" for example the 5min chart of instrument XYZ, in the above two ways,
would all the other traders not throw up their arms in the air and cry "no fair"?
Secondly if you do not trade against retail. Where do your profits come from?
Are you trying to screw the other five firms that dominate, or any HFT's slower than you? If it is slippage or market "inefficincies" then it would seem that the argument that HFT's provide liquidity, becomes mute, because they simply take profits from the inefficencies that they create through adding liquidity.
Sure, I think that all these activities are exploitative. The whole reason that I am participating in this thread is because I want to show concrete evidence that we do none of these.
"Dominated" is the most accurate word that I can use.
I don't want to specify names because I have many close friends in these firms, but there are 3 firms that I want to describe.
There's a U.S. firm that does outright the most volume on the CME (by the way, this firm also does the most volume on the Eurex among all U.S. firms, but there are bigger European-based players on the Eurex). Then there are 2 firms in Amsterdam that dominate options market-making and trading between displayed markets and anything that's OTC or on ECNs and liquidity pools respectively. Now, the U.S. firm is very well-capitalized, more so than the two Dutch firms. (To put this in perspective, only until very recently, one of those 2 Dutch firms was deleting their historical data because they had simply so much data and not enough space and bandwidth to coordinate all of it firmwide.)
When you're one of these 3 firms, you're not going to get any preferential treatment from market data vendors, the exchange or regulators over the other 2. You're also capable of the same speeds because you're nearly at the theoretical limit of your hardware. So what happens when the richer firm tries to force its way into a space that another firm has traditionally dominated?
Now, the said U.S. firm tried for a while to force their way into options market-making by sheer financial firepower. And they failed miserably to the point that they had to cut back their infrastructure spending on those markets because otherwise they would just be making net losses after infrastructure. I know that their management is against market fragmentation, but they are so dominant in the futures business that they only way to expand is laterally, so they began trying to get into the dark pool business. They are yet to pose any competition to the other Dutch firm in this area as well.
I think this example is beautifully illustrative. Firstly, if even the most prominent 'HFT' firm in the world is unable to penetrate a market with its financial firepower, what can you say of the firms that have created such a monopoly in that particular market? Secondly, it shows that the reason that the fastest firms are doing well has nothing to do with speed or preferential treatment. It's just an order of magnitude's difference in our trading models for the things that we specialize in.
Well, it's easier to prove by contraposition here. The retail market is microscopic; you can't explain the revenue across our industry based on the hypothesis that we trade against retail traders, so surely there has to be something more.
As for where our profits come from, I think that varies from firm to firm and strategy to strategy, so my answer wouldn't really amount to anything.
Deleting old posts that turn out to be wrong is an easy way to convince others you know what you are talking about. But sooner or later, someone will capture your misguided rants, and no amount of shouting or name calling will save you.
Platform: "I trade, therefore, I AM!"; Theme Song: "Atomic Dog!"
Trading: EMD, 6J, ZB
Posts: 796 since Oct 2009
I voted, and will simply say: "priceless",
the poll asked what is futures.io (formerly BMT) worth (just in case, over time, it disappears and the reference becomes irrelevant; huh, where's spell checker?)
I couldn't even afford to be in the same room with some of the participants on this thread. I will say, it has been highly informative and shed volumes of light on what would otherwise be secretive internal corporate communication and trade craft.
kudos for sharing and enlightening all of us with your comments, insights and such
such bantering back and forth allows each of us to schmaltz without offense...
I'm posting this here because there has been a lot of mis-information and bad science in this thread surrounding the 9/18 FOMC news release. Stephane Tyc, a founder of the McKay Brothers (the microwave telecom guys) published a new paper today that corroborates our findings Nanex ~ 20-Sep-2013 ~ Einstein and The Great [AUTOLINK]Fed[/AUTOLINK] Robbery
It's amazing how you can spin a conspiracy theory out of everything. I've only personally requested Mike to take down content twice on this forum, and for legitimate reasons. In fact, I even left the content untouched in my post for 2 hours after I noticed him taking it down in his quote.
There's nothing I can do to respond to your post if all you can say is that you (1) "don't know where to begin" and with that, conclude that I'm (2) "patently wrong".