The value created by the work that you did for hire does not have to translate in to your salary at all, just like you're not going to have to share in the losses if the project turns out to be a dud.
When a welder helps to put together an oil rig that then either makes millions of dollars or explodes, sinks and causes billions in damage the fact that he did it as a salaried employee shields him from the damage just as much as it will insulate him from taking a share in the profits.
That's why it's work for hire. You get to decide up-front if that sort of thing is what you want.
So if someone offers you the opportunity to program a computer and make that company millions of dollars you are being compensated for your time, not for how much money your software will make.
The shareholders of the investment bank and the people that thought up the spec for the thing that you are building will have a much bigger claim to the profits than the guy that codes it up, and not surprising, they're the ones that will eventually make more money on it than you.
Why programmers should be different in this way from welders is not clear to me. Everybody that works for 'big-corp' makes the same kind of deal, and if you didn't make more money for the company than you cost you probably wouldn't have a job to begin with.
You clearly haven't worked in finance. The traders get a percentage cut, as do the quants, it's only reasonable the hackers started asking where their cut was. However they are conflating programmers and quants here, the guy who puts together a FIX interface is a pretty replaceable cog, the guys who develop algorithms and their implementations are quite literally worth their weight in gold if they're good. The thing with the serious high-freq stuff is the line between implementation and algorithm really starts to blur, you need people who can write seriously fast code that's also bulletproof and can be turned around fast. You need a deep understand of how markets work, how feeds work, how to handle everything from fast market conditions to managing latency issues in multi-venue trade distribution setups.
It's a hybrid of programmer, trader, and quant. The article doesn't mention this, but they know how to program and how to trade. They come up with, code, and write the algorithms. At a prop firm it is usually used by a desk of clerks / traders at that point, who tweak dials on the software depending on market conditions. It's a lot more than just writing code. Going the startup route requires adding on the businessman, sales, negotiating hats as well as taking management of the desk and the traders / clerks. It's a not a trivial step by any degree, however compared to the value the trade developers are adding to the trade versus how they are being compensated, some how been willing to take on that extra burden to get a chance at a better deal.
I don't think the article was disputing the original work contracts or implying that any part of the contracts were illegal or deceptive. Instead, the programmers mentioned in the article were upset because they became aware of just how valuable their work and knowledge can be. Those past high frequency trading work contracts are over and done with, but that doesn't mean the programmers need to take the same terms for future work. In fact, with some investment of their own, they may be able to supplant some of the established trading house market with their own startups and actually receive the fruits of their labor. What a concept!
Wealth is all about percentages and the standard profit percentage share for professionals and engineers, "big-corp" or otherwise, is 0%. These programmers left to start their own trading companies, likely because the salary bumps being offered (a measly $45,000 extra on $150,000 base salary, in the example) were insulting compared to the revenue being generated directly from their work. That's demonstrable value. Consider: a 1% profit share from the example in the article would be over $300,000 per year. Not a large bonus at all for a financial managers or executive, but not an outlandish bonus for a highly valuable member of a lucrative enterprise, either.
Your last paragraph sounds a lot like, "keep your head down and be thankful you have a job." I assume you're just defending the status-quo and pointing out the tradeoff between sharing the risk/reward and being comfortably salaried. You can't possibly be implying that programmers or other skilled professionals shouldn't even try to negotiate better contracts, right?
I think financial industry programmers are at the leading edge of this phenomenon (much like quants were the leading edge of programmers being paid for value rather than for hours), because they're the programmers who can most easily demonstrate that their code directly made a company millions. They're not the end of it by a long shot.
Take A/B testing, analytics, conversion optimization, etc. If you are good at these, you can generate several million dollars of value over the course of a week. If you can credibly offer the prospect of results like that, some companies will pay you very well indeed.
I'd actually love to see more jobs that offered the opportunity to work with a small base salary but increased compensation levels based on measurable results.
I'm really curious about non-startup work models that would encourage this. So far, the easiest path would seem to be via consulting, where you sold your services as business services that happened to be software-based rather than as a "warm body" to staff some open slot somewhere.
It seems that overall, startups are probably lower expected value to the early employees in pure financial terms than having compensation tied to measured results for work done for some other company.
I remember essays by both PG and Joel that mentioned the "value effect", PG talking about a "monster of productivity" hacker who added a bunch of value to Viaweb in a single day and in Joel's case, a summer intern who (I vaguely recall) suggested and then built the joelonsoftware jobs board.
I think fogcreek offered the intern some type of stock option bonus for joining fulltime. I don't remember if the Viaweb hacker got something or already had equity of some sort.
The problem with performance-based pay is that there are quite a few variables outside your control. Say you're doing a simple A/B test that you've correctly deployed. Now imagine Big Boss Man (or Big Client Man) decides to change something else on the website that is likely to affect the results of your test. What do you do then?
Suppose the website goes down and the company doesn't make its millions and now they can measure no performance increase.
Then there is politics. Big Boss Man might go to his Big Big Boss Man and tell him that he deserves the pay rise because he hired you or brought you in as a consultant, and so you're just a tool to his genius. Good luck with that one.
My point is simple: if the bosses or clients don't want to pay you performance, they can find a million ways to do so. Tough contracts only go so far and my suggestion is to never enter such a relationship unless you're 100% trusting of the bosses or clients.
> Take A/B testing, analytics, conversion optimization, etc. If you are good at these, you can generate several million dollars of value over the course of a week. If you can credibly offer the prospect of results like that, some companies will pay you very well indeed.
Given the above statement, which I think is accurate, and given that you're pretty good at those things, and given the following statement from your interview:
> You know what my revenue was for today? Nothing, because we’re in the dog days of summer, and sales slow to a crawl until school gets back in session.
Doesn't that mean that your time would be more valuable employed doing the "million dollars of value in a week" stuff?
Patrick, I have read a lot of your articles on A/B testing and what you do to optimize your order flow etc we do very similar things in trading. I think if you saw how we looked over our trades you would see it's very similar to how you go over your analytics to try to capture more market share. You are spot on, it is not the end of it by a long shot at all. It's all about applying the `conjecture - test - learn - adapt - repeat` process over and over. The faster you can make that cycle the more successful you will be, the more efficient / powerful any of those steps is where our edge comes in. A lot of firms in all parts of business still have yet to realize that is what they are, atleast in part, blindly doing when they are successful.
I have a feeling this article confused the creators of the trading algorithms, which is what makes the money, with pure programmers, who are hired to implement someone else's pre-existing algorithms.
Sometimes these are the same person, but in those cases that person almost always has a profit sharing contract, not only a base salary. (And if they don't, they're crazy.) The fact that the programmers in the article only had base salaries leads me to believe that they weren't the actual creators of the trading algorithms, so they don't really deserve a slice of the profits anyway, because someone else a) created the profit machine and b) is taking all the risks of running it.
What really happens is that these programmer guys learn the trading secrets after a few years on the job, then depart to a different firm to recreate the machine themselves. There's no oppression or revolts here.
HFT algorithms aren't that complex. When it comes to finding the differences of pricing between two brokers buying from the cheapest and selling to most expensive, there's no need for an advanced pricer (and there's no time anyway).
The difficulty of HFT is designing a machine that can trade fast enough. I'm not sure you realize how difficult this is. You just can't take a quant and make him an über C++ programmer overnight.
There's a reason why you need people with different skills to make money, and the reason is that becoming really skilled in whatever field takes years.
Good companies pay everyone making a direct contribution to the profit a fair share, those who don't lose their talents.
That's an easy problem to solve. The people with the trading algorithms can just learn to program. No worries about programmers stealing trading secrets that way.
This is an extreme example of why you don't screw people over, even if you lack empathy.
Nobody likes to be screwed over, but most people take it in exchange for other perks (job security, for one). But people have a screw threshold, and if you cross it, this is what happens.
Now, this is not the main reason not be a jackass -- on the other side of the spectrum, you usually get much in return for being nice (if only for just differentiating yourself from everyone else) -- but that's another story.
It's just the rote journalistic trope of the twisty ending. How would the article end otherwise? "Only time will tell if their get-rich dreams work out?" Too flat. It's considered better to give the reader a little frisson at the end. Bonus points for confirming the reader's pre-existing beliefs, as this one does.
Count your blessings. At least the article didn't start with "Joe Schmoe, a programmer, is setting out to blah blah blah" and then end with "Back at blah blah, Joe Schmoe is still programming away, sure that millions are just around the corner."
Exactly! My immediate thought was, "You smug bastard."
This is why I would never take a job as a programmer in the trading industry working for the big firms. I have dignity, and it would never cross my mind to put up with smug bastards taking this attitude with me all day, no matter how high the salary. It's not that the software is making people tons of money, it's that nobody respects that the software is making people tons of money (the side effect of respect, of course, would be fair compensation).
Yeah, that last part made the article sound like it was attempting to dissuade other programmers from choosing to strike out on their own, as if it had been written by management.
But listening to management about job security is absurd, at least these days it is.
>He says one group was generating $100,000 a day from his high-frequency trading software and paying him $150,000 a year.
I'm not saying I don't want the guy to have a higher salary, but there's an implied fallacy here. It seems he should be paid relative not to how much value his code generates, but to how hard it would be to replace him.
When you say "should", are you making a positive observation or a normative claim? My positive observation is that people get paid whatever amount they can successfully negotiate, and a programmer at the very top of a field with ungodly amounts of cash money flowing around is in a good position to negotiate lots, because their BATNA is "I walk one block out of this office, have coffee with someone, and a week from now I'm making seven figures and you're competing against my algorithms."
And making 100k/day using the tens or hundreds of millions of principal an investment bank can provide is a far cry from making 100k/day trading one's own savings.
I'm Jeff's business partner / fellow programmer. We do both algorithms and infrastructure. The markets continuously adapt. It's a constant balance between writing the code you need right now, managing the code you wrote a bit ago, tweaking your existing strategies / finding new ones. We have to know how to trade, come up with new strategies, and write fast solid software that can adapt to get a new strategy to market in very little time. After that we have to analyze our trades constantly to stay in the competition.
We are market-makers (MM), so we don't care all that much about forecasting / direction. We want to fill order flow at the cheapest price that we can make a profit on. All the competition in our little MM niche of High Frequency (HF) trading revolves around a fight amongst market makers to give the best price possible to customer orders. This leads to very tight markets. That works out very well for customers.
I don't fault previous employers for paying us what they did as the article mentioned. It's a lot more than I ever expected to make coming out of college. The article seemed to have a programmers versus industry slant that I don't quite agree with. In my opinion industry is being taken over by programmers. Companies have a natural upper bound they can pay any employee.
After that, and I have been on both sides of this, either you can accept the comfort of a regular paycheck or you can throw that all away to take a risk and grow in a different way. If you take the risk you're throwing away a sure thing for upside. I don't have a family yet so to me it was the right time to do this.
The `programmers revolt` has been over for years. Programmer's won. Markets are all electronic or will be soon. It is inevitable and good that this happens, in the same sense it is good that we put robots into factories, use statistics to optimize business processes, etc etc.
It's been a longer road to getting to this point than the article mentions, my first bit advice for someone who in the trading industry and wants to branch out on their own, is it's going to be hard, just like any startup. The money you see the company you are working for making is the result of a lot of work, that you just can't appreciate until you have to do it all yourself from scratch. Which we have, twice. The article was a bit off on this, we already had our first `failure` and are trying again. This time we learned to keep our IP.
With a startup, we've had to wear all the hats that as employee we didn't have to think about at all ourselves. It's a combination of awesome, daunting, miserable and satisfying, like any challenging endeavor. Personally I find creating something from the bottom up a lot more rewarding than grinding out a paycheck.
If you're a good C++ programmer with a mathematics degree, what else do you need to know to get into work like this?
Is it worth taking "MFE" style classes, like the ones offered at Baruch and NYU? Are the systems Windows or Unix? How much "advanced" math do you need to know? How much high performance infrastructure do you need to know? (networking, specialized storage & I/O, etc.) Is there a way to go directly to a startup firm, rather than first working at a bank or larger hedge fund? Are languages other than C++ used? Is it easier to do this in New York or Chicago? What bars should I hang out at in order to bullshit my way into an interview or partnership?
kingcub, would like to speak to you briefly over email. Do you have a preferred address for me to contact you? You could also email me at [email protected]
The article is only looking at a few of the shops. The good ones pay their developers based on performance with some tied directly in to their group's PnL (top firms like Getco, Goldman [on their HFT platform only], Jump, etc) pay their experienced guys over $500k, with some of those guys on over $1MM. The Sergey A. case, where a guy makes over $1MM guaranteed, is not that uncommon. Of course, right out of school they pay low 6-figures, but after 4-5 years of proven track record, if the firm doesn't want to pay $300k+ in compensation, their competitors will. Then its the developer's fault for not making sure they are in the market and getting compensated market rate.
Today's financial mathematicians are equally adept at programming and computational science. It seems unlikely that these guys are your run of the mill programmers.
A market for trading perception of value should be regulated to increments of days or weeks, not minutes.
The current structure for valuating securities does absolutely no good for our society. Not that it's overly evil or anything, it's just pointless, a massive waste of time and money, and is a cancer on our economic system. It's got to be a thrilling thing to code for though.
High frequency trading is under pretty high powered scrutiny at present. I fully expect legislation implementing trade reforms that will render the practice worthless in the very near future, whether it's frequency limits or per-transaction fees/taxes.
If these guys want to spend money and time on start-ups that will likely be out of business before they come online, that's no skin off my nose. In fact, please excuse me while I laugh. These guys are basically the last players in on the ponzi scheme.
Nah. Not going to happen. They introduced a bunch of legislation already in congress trying to tax per per share per transaction, all got killed very quickly; offends the All-American capitalism sensibilities too much.
While I agree with you that HFT is a scam, I disagree with you that it's a ponzi scheme. It's more like ticket-scalping, so the scheme is going to go on forever, as long as SEC allows it (which they will because the sell-side lobby groups will label themselves as liquidity providers that tighten the spread) and normal people are trading.
What amuses me about Main Street's outrage on HFT is that they suddenly take this expose as a new revelation that Wall Street is screwing with retail investors when the big prop shops/broker-dealers have been raping retail investors and pension plans/retirement mutual funds for decades. HFT is just the latest instrument of exploitations.
I'm interested in playing with algorithmic (maybe even HF) trading to see if it's fun.
Can anyone recommend a source of data on the cheap so I can papertrade? Clearly realtime data feeds are going to cost... but isn't there some public repository of historical data someplace?
Can someone explain in simple terms why high-frequency trading actually works? I can't understand how trading at a high frequency provides any advantage at all, except in a Martingale-fallacy way.
Certain trades are obvious winners- index funds available for less than the sum of their component parts for example. Everyone on the street knows they are obvious winners, so usually the trade isn't available for long. Firms have computers set up to constantly scan the markets for these opportunities. Whoever sees the trade first and gets to the exchange first ends up making all the money.
Caveat, I'm not a finance guy, but my understanding is that on a short time scale you can predict the price direction of stocks under certain conditions.
For example, if I notice that there are several large orders buying a stock, I can assume that a large institution is trying to purchase a position. If you reach this conclusion quickly enough, you can buy up enough stock, temporarily hiking the price, and selling the stock back to the large institution as they are trying to fulfill their purchase order. Do this enough times, and for large enough orders, and you can make money.
It is the same for every company. Employee says I do 'x' and without me, the company would not be able to operate therefore I deserve part of the profit. Thing is, the employee was hired on and agreed to do 'x' and so they do not have a right to claim any more. As such, they can strike out on their own and as the article says, learn that there is great risk to be had and choose between large risk and making millions or little risk and a small salary.
I don't think those bosses have so much more risk than the programmers, yet they earn substantially more than the programmers according to the article.
Not of what they made in the past, but they can certainly terminate the agreement and change the rules from now on (assuming that the boss approves, obviously).
[+] [-] jacquesm|15 years ago|reply
When a welder helps to put together an oil rig that then either makes millions of dollars or explodes, sinks and causes billions in damage the fact that he did it as a salaried employee shields him from the damage just as much as it will insulate him from taking a share in the profits.
That's why it's work for hire. You get to decide up-front if that sort of thing is what you want.
So if someone offers you the opportunity to program a computer and make that company millions of dollars you are being compensated for your time, not for how much money your software will make.
The shareholders of the investment bank and the people that thought up the spec for the thing that you are building will have a much bigger claim to the profits than the guy that codes it up, and not surprising, they're the ones that will eventually make more money on it than you.
Why programmers should be different in this way from welders is not clear to me. Everybody that works for 'big-corp' makes the same kind of deal, and if you didn't make more money for the company than you cost you probably wouldn't have a job to begin with.
[+] [-] msy|15 years ago|reply
[+] [-] kingcub|15 years ago|reply
[+] [-] m104|15 years ago|reply
Wealth is all about percentages and the standard profit percentage share for professionals and engineers, "big-corp" or otherwise, is 0%. These programmers left to start their own trading companies, likely because the salary bumps being offered (a measly $45,000 extra on $150,000 base salary, in the example) were insulting compared to the revenue being generated directly from their work. That's demonstrable value. Consider: a 1% profit share from the example in the article would be over $300,000 per year. Not a large bonus at all for a financial managers or executive, but not an outlandish bonus for a highly valuable member of a lucrative enterprise, either.
Your last paragraph sounds a lot like, "keep your head down and be thankful you have a job." I assume you're just defending the status-quo and pointing out the tradeoff between sharing the risk/reward and being comfortably salaried. You can't possibly be implying that programmers or other skilled professionals shouldn't even try to negotiate better contracts, right?
[+] [-] patio11|15 years ago|reply
Take A/B testing, analytics, conversion optimization, etc. If you are good at these, you can generate several million dollars of value over the course of a week. If you can credibly offer the prospect of results like that, some companies will pay you very well indeed.
[+] [-] tom_b|15 years ago|reply
I'm really curious about non-startup work models that would encourage this. So far, the easiest path would seem to be via consulting, where you sold your services as business services that happened to be software-based rather than as a "warm body" to staff some open slot somewhere.
It seems that overall, startups are probably lower expected value to the early employees in pure financial terms than having compensation tied to measured results for work done for some other company.
I remember essays by both PG and Joel that mentioned the "value effect", PG talking about a "monster of productivity" hacker who added a bunch of value to Viaweb in a single day and in Joel's case, a summer intern who (I vaguely recall) suggested and then built the joelonsoftware jobs board.
I think fogcreek offered the intern some type of stock option bonus for joining fulltime. I don't remember if the Viaweb hacker got something or already had equity of some sort.
[+] [-] pierrefar|15 years ago|reply
Suppose the website goes down and the company doesn't make its millions and now they can measure no performance increase.
Then there is politics. Big Boss Man might go to his Big Big Boss Man and tell him that he deserves the pay rise because he hired you or brought you in as a consultant, and so you're just a tool to his genius. Good luck with that one.
My point is simple: if the bosses or clients don't want to pay you performance, they can find a million ways to do so. Tough contracts only go so far and my suggestion is to never enter such a relationship unless you're 100% trusting of the bosses or clients.
[+] [-] davidw|15 years ago|reply
Given the above statement, which I think is accurate, and given that you're pretty good at those things, and given the following statement from your interview:
> You know what my revenue was for today? Nothing, because we’re in the dog days of summer, and sales slow to a crawl until school gets back in session.
Doesn't that mean that your time would be more valuable employed doing the "million dollars of value in a week" stuff?
[+] [-] kingcub|15 years ago|reply
[+] [-] jmillerinc|15 years ago|reply
Sometimes these are the same person, but in those cases that person almost always has a profit sharing contract, not only a base salary. (And if they don't, they're crazy.) The fact that the programmers in the article only had base salaries leads me to believe that they weren't the actual creators of the trading algorithms, so they don't really deserve a slice of the profits anyway, because someone else a) created the profit machine and b) is taking all the risks of running it.
What really happens is that these programmer guys learn the trading secrets after a few years on the job, then depart to a different firm to recreate the machine themselves. There's no oppression or revolts here.
[+] [-] shin_lao|15 years ago|reply
The difficulty of HFT is designing a machine that can trade fast enough. I'm not sure you realize how difficult this is. You just can't take a quant and make him an über C++ programmer overnight.
There's a reason why you need people with different skills to make money, and the reason is that becoming really skilled in whatever field takes years.
Good companies pay everyone making a direct contribution to the profit a fair share, those who don't lose their talents.
[+] [-] ryoshu|15 years ago|reply
[+] [-] kiujhyghjkl|15 years ago|reply
The bank's customers are taking the risk of running it not the traders - it's not the trader's money
[+] [-] drx|15 years ago|reply
Nobody likes to be screwed over, but most people take it in exchange for other perks (job security, for one). But people have a screw threshold, and if you cross it, this is what happens.
Now, this is not the main reason not be a jackass -- on the other side of the spectrum, you usually get much in return for being nice (if only for just differentiating yourself from everyone else) -- but that's another story.
[+] [-] nphase|15 years ago|reply
The condescending tone of this line really bugs me.
[+] [-] gruseom|15 years ago|reply
Count your blessings. At least the article didn't start with "Joe Schmoe, a programmer, is setting out to blah blah blah" and then end with "Back at blah blah, Joe Schmoe is still programming away, sure that millions are just around the corner."
[+] [-] SwellJoe|15 years ago|reply
This is why I would never take a job as a programmer in the trading industry working for the big firms. I have dignity, and it would never cross my mind to put up with smug bastards taking this attitude with me all day, no matter how high the salary. It's not that the software is making people tons of money, it's that nobody respects that the software is making people tons of money (the side effect of respect, of course, would be fair compensation).
[+] [-] Leon|15 years ago|reply
But listening to management about job security is absurd, at least these days it is.
[+] [-] endtime|15 years ago|reply
I'm not saying I don't want the guy to have a higher salary, but there's an implied fallacy here. It seems he should be paid relative not to how much value his code generates, but to how hard it would be to replace him.
[+] [-] patio11|15 years ago|reply
[+] [-] SkyMarshal|15 years ago|reply
[+] [-] lol|15 years ago|reply
[deleted]
[+] [-] kingcub|15 years ago|reply
We are market-makers (MM), so we don't care all that much about forecasting / direction. We want to fill order flow at the cheapest price that we can make a profit on. All the competition in our little MM niche of High Frequency (HF) trading revolves around a fight amongst market makers to give the best price possible to customer orders. This leads to very tight markets. That works out very well for customers.
I don't fault previous employers for paying us what they did as the article mentioned. It's a lot more than I ever expected to make coming out of college. The article seemed to have a programmers versus industry slant that I don't quite agree with. In my opinion industry is being taken over by programmers. Companies have a natural upper bound they can pay any employee.
After that, and I have been on both sides of this, either you can accept the comfort of a regular paycheck or you can throw that all away to take a risk and grow in a different way. If you take the risk you're throwing away a sure thing for upside. I don't have a family yet so to me it was the right time to do this.
The `programmers revolt` has been over for years. Programmer's won. Markets are all electronic or will be soon. It is inevitable and good that this happens, in the same sense it is good that we put robots into factories, use statistics to optimize business processes, etc etc.
It's been a longer road to getting to this point than the article mentions, my first bit advice for someone who in the trading industry and wants to branch out on their own, is it's going to be hard, just like any startup. The money you see the company you are working for making is the result of a lot of work, that you just can't appreciate until you have to do it all yourself from scratch. Which we have, twice. The article was a bit off on this, we already had our first `failure` and are trying again. This time we learned to keep our IP.
With a startup, we've had to wear all the hats that as employee we didn't have to think about at all ourselves. It's a combination of awesome, daunting, miserable and satisfying, like any challenging endeavor. Personally I find creating something from the bottom up a lot more rewarding than grinding out a paycheck.
[+] [-] starkfist|15 years ago|reply
Is it worth taking "MFE" style classes, like the ones offered at Baruch and NYU? Are the systems Windows or Unix? How much "advanced" math do you need to know? How much high performance infrastructure do you need to know? (networking, specialized storage & I/O, etc.) Is there a way to go directly to a startup firm, rather than first working at a bank or larger hedge fund? Are languages other than C++ used? Is it easier to do this in New York or Chicago? What bars should I hang out at in order to bullshit my way into an interview or partnership?
[+] [-] prog123hn|15 years ago|reply
[+] [-] takrupp|15 years ago|reply
[+] [-] gary201147|15 years ago|reply
[+] [-] adn37|15 years ago|reply
[+] [-] parallax7d|15 years ago|reply
The current structure for valuating securities does absolutely no good for our society. Not that it's overly evil or anything, it's just pointless, a massive waste of time and money, and is a cancer on our economic system. It's got to be a thrilling thing to code for though.
[+] [-] drx|15 years ago|reply
Your thinking represents a common fallacy: "I cannot immediately see any benefit to X, therefore X is pointless / should be abolished".
[+] [-] beloch|15 years ago|reply
If these guys want to spend money and time on start-ups that will likely be out of business before they come online, that's no skin off my nose. In fact, please excuse me while I laugh. These guys are basically the last players in on the ponzi scheme.
[+] [-] noname123|15 years ago|reply
While I agree with you that HFT is a scam, I disagree with you that it's a ponzi scheme. It's more like ticket-scalping, so the scheme is going to go on forever, as long as SEC allows it (which they will because the sell-side lobby groups will label themselves as liquidity providers that tighten the spread) and normal people are trading.
What amuses me about Main Street's outrage on HFT is that they suddenly take this expose as a new revelation that Wall Street is screwing with retail investors when the big prop shops/broker-dealers have been raping retail investors and pension plans/retirement mutual funds for decades. HFT is just the latest instrument of exploitations.
[+] [-] Sukotto|15 years ago|reply
Can anyone recommend a source of data on the cheap so I can papertrade? Clearly realtime data feeds are going to cost... but isn't there some public repository of historical data someplace?
[+] [-] ssp|15 years ago|reply
[+] [-] Dilpil|15 years ago|reply
[+] [-] Elite|15 years ago|reply
For example, if I notice that there are several large orders buying a stock, I can assume that a large institution is trying to purchase a position. If you reach this conclusion quickly enough, you can buy up enough stock, temporarily hiking the price, and selling the stock back to the large institution as they are trying to fulfill their purchase order. Do this enough times, and for large enough orders, and you can make money.
[+] [-] unknown|15 years ago|reply
[deleted]
[+] [-] TGJ|15 years ago|reply
[+] [-] thijsterlouw|15 years ago|reply
[+] [-] tomjen3|15 years ago|reply
Not of what they made in the past, but they can certainly terminate the agreement and change the rules from now on (assuming that the boss approves, obviously).
[+] [-] inboulder|15 years ago|reply
[+] [-] known|15 years ago|reply
[+] [-] redrobot5050|15 years ago|reply
[+] [-] nivertech|15 years ago|reply
[+] [-] guelo|15 years ago|reply