If they were truly able to get the best prices for any order than why do they need to pay for traffic via pay for order flow? Why wouldn't every single equity trade go through HFT if they were truly more efficient than directly on stock exchange and consistently got the best prices for users? Am I missing something or is this industry convoluted to you all as well #hft #citadel #twosigma #janestreet
I might be wrong, but isn't high frequency trading just low latency algorithmic trading? They're not functioning as an exchange exactly. I thought they were a user. Their main product is a system that makes decisions to trade quickly. It's not just a fast path to trading. It's a system that makes money by trading and responding to market changes quicker than other humans and automatic systems. This is why they hire FPGA ppl. Put another way, they're racing you.
95% of equity trades already go through HFT, so your premise is invalid. Also, HFTs can't become exchanges, because there is a conflict of interest involved where HFTs could just manipulate prices if they *were* the exchange. Although, this is already happening in shady markets like crypto where Binance could manipulate prices willy-nilly without anybody anybody knowing. The best situation possible for retail investors is to have hundreds of HFTs competing for your order on a *few* exchanges which is already the current state of the market.
They go through HFTs due to front running. I had access to raw exchange data, and I could see the repeated hundred time a second front runner activity trying always to insert itself in a trade. If it didn't exist it'd be much better I was a data scientist looking for fraud. Had full access to unannoymized trade data. It was our opinion it should be curtailed, by executing all trades on the minute mark at once rather than live as it is now.
Perhaps you looked at the data more than 10 years ago? Front running has been illegal since at least 2012, and in US equities (one of the most regulated markets in the world), it's extremely easy to catch and people would go to jail for a very long time if they tried to front run even a single order. Also, just because you see a trade right after another within the tick stream, it's most definitely other HFTs reacting to the trade rather than front runners, HFTs use FPGAs that react within 100 nanoseconds to market events, and buying / selling directly after a big trade is one of the oldest HFT strategies in the book.
I worked in HFT and been on the other side selling, we buy order flow as a hedge fund cuz retail is retarded and makes bad trades with wide spreads
First off, HFT and PFOF are two separate things. Second, this industry is extremely convoluted, hence the Great Recession. Market Makers have to pay for order flow because they are competing with others who are also offering prices better than the exchanges or offering other incentives.
It's quite simple. most people trading have no idea how to price shit, it is in fact their bad prices that are the most profitable for HFTs Are you really surprised that certain firms that rhyme with shitadel would pay for the opportunity to get first dibs?
This is a real smoothbrain take. Not everything is zero sum You get a fill at the same price you would get on the exchange Citadel pays to trade with you, because you are obviously retarded, like all retail Everyone is happy
This is why you work for yahoo
im at a FAANG now if you must know. Your product just encourages people to financially irresponsible, and it's clear you have no idea how to answer my question
loll that does not make the cut ππ