US Stock Market is rigged?!

taktikz

taktikz

WF Veteran
Oct 22, 2008
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Tampa, FL
(Reuters) - The U.S. stock market is rigged in favor of high-speed electronic trading firms, which use their advantages to extract billions from investors, according to Michael Lewis, author of a new book on the topic, "Flash Boys: A Wall Street Revolt."

High-frequency trading (HFT) is a practice carried out by many banks and proprietary trading firms using sophisticated computer programs to send gobs of orders into the market, executing a small portion of them when opportunities arise to capitalize on price imbalances, or to make markets. HFT makes up more than half of all U.S. trading volume.

The trading methods and technology that make HFT possible are all legal, and the stock exchanges HFT firms trade on are highly regulated. But Lewis said these firms are using their speed advantage to profit at the expense of other market participants to the tune of tens of billions of dollars.

"They are able to identify your desire to buy shares in Microsoft and buy them in front of you and sell them back to you at a higher price," Lewis, whose book is available on Monday, said on the television program "60 Minutes" on Sunday.

"This speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds," said Lewis, whose books include "The Big Short" and "Moneyball."

Those milliseconds can be valuable, making it possible to send around 10,000 orders in the blink of an eye.
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U.S. stock markets are rigged, says author Michael Lewis | Reuters
 


Eh....you live under a rock bro?

ROCK.jpg
 
In other news, the Pope's a Catholic.

Will say this though, Michael Lewis' books are a great read. Check out Liars Poker and Boomerang if you haven't already.
 
It's rigged in the sense that if your trying to compete with HFT for a few pennies here and there then yes, the deck is stacked against you. If your more of a long term investor that's a different story.
 
I wonder what the true numbers are, percentage wise, for HFT. I watched part of that 60 minutes. They mentioned over 50% of all trades are HFT. I remember reading a few yrs ago that the number was 75% of all daily trades. It's probably higher though
 
groneg said:
I wonder what the true numbers are, percentage wise, for HFT. I watched part of that 60 minutes. They mentioned over 50% of all trades are HFT. I remember reading a few yrs ago that the number was 75% of all daily trades. It's probably higher though
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The % of all trades that's HFT is down from a few years ago; once the secrets were out the HFT game became overcrowded, law of diminishing returns kick in, best (most expert & well funded) survive. HFT is inherently unfair - it's an outrage, really, but once the major US exchanges (NYSE / Nasdaq / Amex) became for-profit entities in themselves there's reason to believe they cater to HFT over customer execution.
 
"They are able to identify your desire to buy shares in Microsoft and buy them in front of you and sell them back to you at a higher price," Lewis, whose book is available on Monday, said on the television program "60 Minutes" on Sunday.
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Wow! They are better than some Gods then.
 
Yeah, markets rigged. No money to be made there. Better to invest your retirement money in bitcoin instead.
 
This is really interesting and kind of cool. But it's just about order execution.

Unless you are dealing with tons of money and/or tons of trades, it doesn't really matter.
 
r3p1v said:
This is really interesting and kind of cool. But it's just about order execution.

Unless you are dealing with tons of money and/or tons of trades, it doesn't really matter.
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Mostly it's about order execution - but here's how it fucks over people. HFT-like innovation has demolished the sell-side of the equity marketplace, what had been the traditional means for delivering order execution for institutions and individuals alike.

Now, when you or I buy buy MSFT or APPL or CAT or any other liquid stock, not such an issue. But illiquid stocks (stocks that don't trade a lot) are more illiquid than ever, largely because capital commitment (capital commitment: think an outfit like Knight Securities willingness to step up and be the other side of your buy/sell order without subjecting you to the whims of a fickle electronic market) has dried up, almost totally because of HFT. Now when you, as a little guy, try to buy an illiquid stock you're at the mercy of HFT ... the algos know you're trying to buy 1500 shares of WKDF and no human element is there to even throw a feint at an orderly marketplace. Good luck with that.
 
The real question worth debating is whether these HFT programs should be built using PHP or Python.
 
mGrunin still the king. Inflated or not, it pays well.

I for one couldn't have been more happier for mGrunin. Some people win when most people lose.
 
r3p1v said:
This is really interesting and kind of cool. But it's just about order execution.

Unless you are dealing with tons of money and/or tons of trades, it doesn't really matter.
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This ^^


I trade actively and successfully and couldn't give a shit about this, because

A) my positions typically last for 1 month - 6 months
B) I'm not putting 10,000,000 into each position or anything crazy. not even close. Nobody cares what I do or tries to capitalize on what I do.
 
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