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Author Topic: ...breaks 10,000 - how much of that is real money? Just another bubble? HFT?  (Read 1434 times)
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WhiskeyGirl
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« on: October 14, 2009, 07:48:23 PM »

As the name suggests, HFT is fast. Traders use computers to execute thousands of orders a second, which, critics say, gives high-frequency traders an unfair advantage over ordinary investors and is leading to a two-tiered market. For many, HFTs are the new hedge funds, with new outfits opening up every day and attracting talent away from more traditional firms. “These are the new bulge bracket firms, replacing the Citigroups and Goldmans,” says O’Brien.

HFT first emerged in the US about a decade ago, but in the last two to three years it has become very popular with arbitrage/quant houses, accounting for about 50-60 per cent of daily volume in US equity markets.

http://www.irishtimes.com/newspaper/finance/2009/1002/1224255669266.html

How much of that trading is for long term investing?  Investments that last more than a second?
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WhiskeyGirl
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« Reply #1 on: October 14, 2009, 07:55:34 PM »

Quote
The Complete, Totally Non-Controversial Goldman Short-Selling Presentation

So this should definitively put to rest this idea that Goldman Sachs (GS) is sneakily trying to misinform politicians about naked shorting, by confusing the issue with regular shorting.

Recall that Matt Taibbi posted three pages of a presentation, and he called out the bank for being disingenous.

We've obtained the whole deck, and it is clearly not just about naked shorting, but about a range of controversial issues: HFT, dark pools, short-selling, etc. You may disagree with their stance, but this is standard, piddly stuff.

http://www.businessinsider.com/the-complete-totally-non-controversial-goldman-short-selling-presentation-2009-9


here is the link -
http://www.scribd.com/doc/20443419/DC-Mkt-Structure-Deck-9-24-Final

Is this a good thing for Main Street?

One comment from the site

Quote
Kid Dynamite (URL) on Sep 30, 8:18 PM said: 0 0 great presentation. pages 16 and 18 are the best. I also like the suggestion of monitoring HFT for massive order cancellation - the ratio of orders submitted to orders executed. that seems like a reasonable regulation

what the masses don't understand is that GS doesn't need a wiretap on the order bus... they have the best smart router and the best algo's


How about taxing all those trades?  Maybe the ones that don't hold their investments for say five or more years?  Maybe a 60% tax for healthcare?  Spreading the wealth around?
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It doesn't do any good to hate anyone,
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WhiskeyGirl
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« Reply #2 on: October 14, 2009, 08:04:00 PM »

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High Frequency Trading and Its Victims

Even with all the fuss over high-frequency trading, there has been too little focus on how retail investors can get fleeced by Wall Street’s superfast computer-driven trading programs.

Brian Watson’s story is one that both ordinary investors and regulators should heed.

On April 28, Watson was caught in a freak trading storm as shares of Dendreon (DNDN) plummeted 69 percent in 70 seconds. The Seattle biotech’s stock plunged to $7.50 from $24...

Makes me wonder how the market could fall so much so fast last year?

Quote
“If an HFT guy steps away from a stock, that can drive it down,” says Joe Saluzzi, a co-founder of Themis Trading in Chatham, NJ and an outspoken critic of superfast computer-trading. “It’s not necessarily the shorts pressing a stock down, it’s also because of bids disappearing.”

Are records of these bids and disappearing bids available for public inspection?  Buyer?  Seller?  Handler?

Quote
When regulators talk about high-frequency trading they often focus on seemingly obscure things like whether traders should be able to put their computers close to the stock exchange to maximize trading speed, or buy and sell shares through less-than-transparent “dark pools”. These are all important issues, to be sure.

Yet they pale when compared with the threat of a high-frequency trading program sparking a sudden and inexplicable sell-off in a stock.

That’s why it’s imperative for regulators to come clean with what, if anything, they know about the events that led to the April 28 debacle in Dendreon shares.

It’s been five months since that event, and investors are entitled to answers.


How about how Wall Street seemingly went bankrupt overnight last year?  Taxpayers will be paying for generations.

read more here - http://seekingalpha.com/article/166058-high-frequency-trading-and-its-victims
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It doesn't do any good to hate anyone,
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WhiskeyGirl
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« Reply #3 on: October 14, 2009, 08:18:26 PM »

Two more stories -

Quote
Quick-fire trading alters the game

Brisbane Times - Aldo Svaldi - ‎11 hours ago‎

High-frequency trading has left executives and investors alike struggling to know the true value of stocks. ''We have created a market that best serves...

http://www.brisbanetimes.com.au/business/quickfire-trading-alters-the-game-20091014-gxho.html


Quote
Departure Of Teza Founders Left Hole At Citadel - Employee

Wall Street Journal - Jacob Bunge - ‎Oct 13, 2009‎

Malyshev and Kohlmeier were key figures in Citadel's high-frequency trading business, which grew from a $3 million venture in 2004 to earn $1.15 billion...

http://online.wsj.com/article/BT-CO-20091013-712296.html

How can Main Street start a business like that?  Make $1.15 billion seemingly overnight?  I wonder if Nancy knows, maybe she could tap these windfall profits to help pay for healthcare.
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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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