HIGH FREQUENCY TRADING:  (HFT)

HFT a growing cancer is now a major force in markets across the world:

Financial parasites that are only focused on making money, skimming off incalculable billions from pension and investment funds, damaging national economies in the process.

But does anyone in the world really care that the finance industry has found a new way to fleece the public.

HFT are plundering the world and robbing us all while literally having no value to society. 

As the world lurch towards a new technology-driven feudalism, defined by disparities in Wealth and Opportunity they are out of sight out of mind.

The question is how is it possible to inform the big audience that 70% of markets activities are controlled by machines that we will never comprehend?

The free market is based upon the notion that there is equity in price discovery.  Once you have lost that, it is not a free market, it is a controlled market.  Here is a market beyond human control, dominated by super-fast machines running complex computer algorithms that jostled and fight each other at the level of milliseconds, microseconds – and with no meaningful oversight.

Is it facetious to suggest that morality should have a significant impact on the world of trading?

First there’s no turning back on HFT because there are too many implicated interests and morality, it’s something we cannot make a machine understand, or at least not yet.

Computers are essentially calculators, so they don’t do what we want
them to do, in fact, they do what we ordered them to do. In the end, behind a massive smokescreen stocks acquisition there’s always a group of competitors who rule the machine in the best way to get the best incomes.

Nor is there anything ETHICAL? about HFT

They don’t understand if their actions will have influence on the environment which are far away of the price-screens of the parquet.

Some of the most formidable minds in the world were now employed in a technological arms race, a hidden war stalked by million-dollar predator algorithms that could swarm those of the larger, slower players – typically, pension and mutual funds – in the same way a shoal of piranhas might eat an ox, cutting them to shreds and pocketing the profits.

The algorithms at the heart of this world were run not by finance or programming people, but by “quants”: quantum physicists, climate scientists, theoretical mathematicians.

High-frequency traders are even battling for an edge on the trading communication links between London and New York. Remarkably, HFT firms are moving their server farms near to exchange computer to further increase trading speeds.

So What is High Frequency Trading?

High Frequency Trading (HFT) involves the execution of complicated, algorithmic-based trades by powerful computers.

They are capable of wiping trillions in value from Markets as in  the “Flash Crash” of May 2010, in which $1 trillion was wiped off the value of markets in the space of 10 minutes.

The objective of HFT is to take advantage of minute discrepancies in prices and trade on them quickly and in huge quantities. The trades are done at close to the speed of light.  The trades are executed without any human action except for initial programming. In most cases, the trades are executed before individual investors know the quotes of prices, or that the trades happened at all.  This tiny difference in speed enabled the owners of high-speed cables to charge banks and investment companies millions of dollars to gain an edge over their rivals without producing any social benefits whatsoever.

High-frequency traders are preying on investors, and exchanges and brokers were being paid to help them to do it.

For instance, a computer recognizes when one exchange quotes an ask price of one cent more than the quote on another exchange. This computer then trades in extraordinarily large volumes on this information, taking advantage of the arbitrage opportunity in a split second. They have nothing to do with value assessment or creation: the machines’ sole aim was to use speed to game the market.

HFT computers can influence the market for the trader’s own advantage.

Before individual and other investors who do not possess the same sophisticated technology realize, the one-cent spread between the two exchanges is erased and the stock price trades at the same level.

There are now entire hedge funds devoted to this strategy.

HFT accounted for 84% of market activity in the US and almost 60% in Europe.

They are non regulatory as the algos simply mutated.

SO WHERE DOES THIS LEAVES THE REST OF US.

One of the main areas of contention is who the victims of HFT are.

HERE IS AN EDUCATED GUESS. THE POOR. 

The reality is that HFT is unlikely to go away – as there’s not much incentive to do so. 

WE MIGHT NOT BE ABLE TO STOP HFT

BUT WE SURE CAN LOBBY OUR OUT OF DATE UNITED NATIONS WITH OUR SOCIAL MEDIA, SMARTPHONES, E MAILS, TWITTERS, AND FREEDOM OF SPEECH –   TO PASS A PEOPLES RESOLUTION’S TO PLACE A 0.05% WORLD AID COMMISSIONS ON ALL HIGH FREQUENCY TRADING.   That’s a worthy goal, but it’s not an easy trick, and likely even harder to pull off.

The impact on the inequalities IN THE WORLD could be huge. (SEE PREVIOUS POSTINGS)

The next time you bid on E BAY remember that  Bid sniper’ software, is placing bids milliseconds before auctions ended.

Some HFT industry participants are now starting to look at using software and language design originally used in the graphics and gaming industry, so cross-overs between technology and finance that may have seemed far-fetched in the past may now actually begin emerging commercially. Robot Trading is around the corner.

High Frequency Trading (HFT) algorithm run every day in Google stock.