Off slightly from the big selling frenzy maybe, but current volume is the heaviest it's ever been for an uptrend.
Posted on 09/30/2009 8:18:25 AM PDT by SeekAndFind
The price of virtually everything — from stocks to bonds to the food on your plate — is now influenced by high-frequency trading. This type of trading might seem mysterious or complicated, but it's generally just a fancy name for an old and boring practice: market making.
High-frequency trading effectively becomes market making simply by offering to both buy an asset at a given price and sell it a fraction higher. High-frequency traders just change these prices much faster than ever before — mere nanoseconds between orders — reacting in real time to how other investors trade with them.
Many critics complain that high-frequency traders use their lightning-fast computer systems to stealthily steal money from regular investors. In my opinion, this is false. Marketmaking enhances liquidity and actually makes it cheaper to trade for everyone, including ordinary investors.
Rather, high-frequency traders steal opportunities from other high-frequency traders — and that's called competition. Unfortunately, there is less competition these days, with far more subversive effects that critics have failed to recognize.
The problem with the markets today is that they are dominated by a few major players. These marketmakers have become, in effect, market manipulators. In the past, when stocks traded on the floor, no one player could be active in multiple products — otherwise, he would have to be jumping and screaming in all trading pits simultaneously. But the innovation of computers allows the same player — now a big bank or fund — to be everywhere at the same time. And the company with the fastest connection and processing in any one stock is the company with the fastest connection and processing in all stocks.
Technology reigns, rather than knowledge of the traded stock.
(Excerpt) Read more at time.com ...
KEY QUESTION :
Thanks to the Internet and low-cost brokers, you can buy stocks virtually instantaneously and with lower associated costs than ever before. But does this mean that the market more efficiently sets the “correct” price?
HFT for later reminder
When I buy and sell stuff with my own money, I'm the one who decides whether the price is "correct" enough. Getting the state involved in price 'correctness' leads to tragic consequences.
Volume is way down from what it used to be. High-frequency traders would have even more influence now than they used to have.
I don’t think HFT effects the price much. These traders get out ahead of big orders. When the big orders are gone - so are they.
HFT may result in misleading volume statistics. But that would only make a difference in the price of a lightly traded stock.
My first reaction was that some of us work and others sit back and complain about how we get things done --then I realized that Denniger's rant probably brought in a few bucks on the name-calling market so more power to him.
Off slightly from the big selling frenzy maybe, but current volume is the heaviest it's ever been for an uptrend.
Thanks!
Or sell high, and buy low.
Either one works.........
--and the beauty of it the more we slice the pie, the bigger the pie gets. Far from being 'zero sum', what happens when anyone makes money buying and selling is market stability and safer investing.
Free markets, you can't beat 'em.
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