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Author Topic: "$US 45,267 a day in gross trading profits..."  (Read 1219 times)
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WhiskeyGirl
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« on: January 22, 2013, 08:13:11 PM »

"HFT operators profit at your expense"

High Frequency Trading = HFT.  Trades that happen in fractions of seconds make big profits for folks that remain anonymous.  Who really owns the companies traded?  Anyone know? 

Some suggested years ago that a few HFT trades gone bad were really responsible for the melt down.  How exactly does the global financial system melt down in one day?  Recall all the government spending for improving the internet. 

HFT are done in Dark Pools which hide the players and the profits.  Everyday people do not have access.

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In August 2010 the HFT traders made profits of more than $US23 million...

Institutions have increasingly appreciated that HFTs are profiting from their traders at their expense and have shifted their transactions flows into dark pools. Retail investors don't have that option, although some investment banks/brokers are now bundling retail orders for dark execution.

The Kirilenko study found the average profits HFTs made from every future contract traded with retail investors ranged from $US3.49 per transaction to $US5.05 (the less aggressive HFTs actually made the higher profits, while the aggressive traders made more money from larger investors and market makers).

In aggregate, the aggressive HFTs earned about $US45,267 a day in gross trading profits and the HFTs overall earned aggregate gross profits of $US23.6m in August 2010, or an annualised rate of $US280m.

I wonder if the 'retail orders' bundled are reported business?

Where are the checks and balance to ensure that all these 'hidden' trades are paying taxes?  Anywhere in the world?

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If HFTs add little or nothing to the real functions of capital markets -- providing forums for raising and distributing capital and pooling liquidity to enable that to occur efficiently -- but profit at the expense of other market participants and undermine the efficiency of their activity, the regulators could eventually be expected to at least level the playing field and deny them those milliseconds of advantage, particularly as algorithmic trading malfunctions have produced a number of market meltdowns.
  Emphasis added.

Some have likened HFT to 'front running' which IIRC is illegal...

How much hidden money is made in milliseconds before the trades for John Doe on Main Street go through?

read more here - http://www.theaustralian.com.au/business/opinion/hft-operators-profit-at-your-expense/story-fng7vg0p-1226544779208
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WhiskeyGirl
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« Reply #1 on: January 22, 2013, 08:24:58 PM »

"High-Speed Traders Race to Fend Off Regulators "

Quote
The chief executive of Knight Capital Group Inc. KCG +0.27% told Congress in June that rapid-fire trading, the backbone of its business, is a boon to the overall stock market. He cited a study that cautioned regulators against unintended consequences of curbing the practice known as high-frequency trading.

Any chance Obama will level the playing field?  More business as usual since the collapse of 2008?

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Less than two months after the Knight executive's testimony, Knight nearly imploded when computerized trades went haywire, costing it $461 million in losses. Last week, the hobbled firm agreed to a takeover.

...As the firms work to convince policy makers their practices are benign or even beneficial, one of their primary tools has been research seeded by the industry itself, promoted by lobbying that has increased in recent years.

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In high-frequency trading, computers place thousands of buy and sell orders and instantly cancel many of them, having placed them just to test demand. Such trading has come to dominate U.S. stock markets, making up more than half of daily volume, and increasingly influences how currencies, commodities and other assets trade. It is at the center of a debate about the future of financial markets.
  Emphasis added.

Quote
In September, Andrew Brooks, head of U.S. equity trading for mutual-fund giant T. Rowe Price Associates Inc., TROW +1.12% told senators holding a hearing on computerized trading there are "problems below the surface" of markets dominated by speed. He called the practice of blasting and instantly canceling masses of orders "inherently wrong," saying the "continued push for speed is not producing any marginal benefit to investors and in fact may be detrimental." Mr. Brooks said market rules and regulations "seem to further enable those with short-term profit incentives," as opposed to those focused on the long-term value in companies.

read more here - http://online.wsj.com/article/SB10001424127887324001104578165842110484364.html

If you read the article, it mentions two Republicans that seem to be against regulation.  For some reason, Mr. Obama's admin hasn't jumped to tax or regulate this 'lucrative' business, despite the dangers that have been identified. 

Derivatives?  $1,000 TRILLION and nobody taxes these so called 'gambling' contracts.

HFT - Billions and no taxes?  No disclosure?  What's wrong with this picture?
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
WhiskeyGirl
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« Reply #2 on: January 22, 2013, 08:35:47 PM »

read more -

Dark Pools Grow as Wall Street Eyes Regulation - http://www.cnbc.com/id/100380484

and

Casino-Type Stock Market Is Deterring Investors: Broker

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Trading volumes for stocks have decreased since 2008 and a series of high profile glitches have continued to hurt investor confidence. On Tuesday, erroneous trades led to a spike in a number of U.S.-listed stocks including Pandora Media and Nokia.

Quote
Examples include the computer malfunction at Knight Capital Group which lost $440 million, the FacebookIPO where stocks traded well below their initial asking price and more recently in India where a “flash crash” wiped nearly $60 billion off the Indian stock index.

Chump change?  I'm still waiting for my billion dollar bailout.  How much debt has been heaped onto the heads of every American?  $50,000 in Obama's first term?  Wasn't he the guy that campaigned for everyday people?

source http://www.cnbc.com/id/49354082

Did a 'glitch' cause the markets to stall in 2008?  I don't think the event has ever been explained to the public.  The massive spending, did it really address the problem?  Waste, fraud, and abuse?  Create meaningful jobs?

What exactly happened in 2008?  Why did US taxpayers get stuck with the bill?  Are still being stuck with the bill?

Why isn't it China's fault for failing to keep the global economy going?  Why does all the spending have to be with borrowed money in the US?

just my humble opinions and questions
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
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