Monday, March 31, 2014

Forbes Is Clueless About HFT

A commneter and a couple of emailers have asked me my views on a column by Tim Worstall in ForbesMichael Lewis Is Entirely Wrong About High Frequency Trading Hitting The Little Guy.

While I view the claim by Lewis, that high frequency trading has rigged the entire market,e nonsense (SEE: The Nonsense Surrounding Michael Lewis's Contention That the Stock Market is Rigged), HFT is skimming--aided by SEC government regulations, which allow elitists Wall Street firms to gain an outrageous edge.

 Worstall appears to be clueless about this. He argues that HFT traders are providing liquidity to the markets. Market makers and regular short-term traders add liquidity to markets, but not HFT operators. They are pure and simple front running.

That said, if you are going to play complicated games in the markets, you better know what you are doing. I don't put in writing my trading strategies, but traders, at times, have attempted to front run me. There are very easy methods to counteract certain types of front running---and to counteract with a damn good profit!

If you don't understand the game, invest for the long-term and buy undervalued stocks, the short-term trading gimmicks won't impact you.

As I said, I don't discuss my trading in writing, but if you ever meet me in person. I will be glad to explain how to beat front runners. Also ask me about the time I screwed a billionaire at his very own evil game. That story always gets plenty of laughs. And I promise to write that story up once he dies, but I really don't want to piss him off anymore than he already is, so it will have to wait until he departs to hell.


  1. It's really not possible to outsmart the front runners. Their HFT programs do not try to anticipate your trading, they merely locate their computers at a location that they can actually see the order you placed with a particular exchange, but get their order to another exchange a millisecond or so before your order is executed.

    1. Oh yeah? Come talk to me about it. I didn't say all front running, just some. And front running is never about "anticipating" trading, it is about getting in front of your order.