How's that? HFT lowers the barrier of entry for ordinary participants who just want to invest their savings either directly or through something like a pension fund, because they get all those benefits I mentioned, and those benefits are useful when you are only executing a trade once a month or year.
It only increases the barrier to entry to people who want to do HFT themselves on a smaller scale, because they now can't compete on latency etc. But it's a bit of a circular argument to say that it's a bad thing that engaging in HFT increases the barrier of entry to HFT.
In any case, and to reiterate, I wasn't refuting a claim that HFT is a bad thing, I was refuting your original claim that it's pointless. For something to be pointless, there has to be no purpose to it whatsoever, which means it has to have no benefits.
actually you do need another participant to take the other side of your trade. That’s not a middle man. Market makers, liquidity providers, are a key component of these markets, taking risk with their own capital (no systemic risk, no too big to fail, going to get a government is things go badly), requiring sophistication and specialization to survive in an ultra competitive environment with a high degree of uncertainty and risk exposure.
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How's that? HFT lowers the barrier of entry for ordinary participants who just want to invest their savings either directly or through something like a pension fund, because they get all those benefits I mentioned, and those benefits are useful when you are only executing a trade once a month or year.
It only increases the barrier to entry to people who want to do HFT themselves on a smaller scale, because they now can't compete on latency etc. But it's a bit of a circular argument to say that it's a bad thing that engaging in HFT increases the barrier of entry to HFT.
In any case, and to reiterate, I wasn't refuting a claim that HFT is a bad thing, I was refuting your original claim that it's pointless. For something to be pointless, there has to be no purpose to it whatsoever, which means it has to have no benefits.
We all know that middlemen are bad.
We don't need an HFT middleman.
actually you do need another participant to take the other side of your trade. That’s not a middle man. Market makers, liquidity providers, are a key component of these markets, taking risk with their own capital (no systemic risk, no too big to fail, going to get a government is things go badly), requiring sophistication and specialization to survive in an ultra competitive environment with a high degree of uncertainty and risk exposure.
How is HFT a middle man? We're not talking about things like market makers in this discussion