High Frequency Trading Has No Economic Value

Suppose that all the high frequency traders were interviewed for a job.  I asked them “What are you doing for me, that I should pay you all this money?”  They would reply “We’re providing liquidity!” or “We’re facilitating price discovery!”  That is nonsense.

The rules of the market favor insiders.  If you tried to invest your own money and implement a high-frequency trading system, you will probably fail.  Insiders get perks that you don’t get.

The high-frequency traders co-locate servers at the exchanges.  Unless you also do that, you have a disadvantage.

The high-frequency traders are usually linked to a big bank.  They get to peek at incoming customer orders.  The bank can fill the trade from their own account, or send it out to the market.  That’s a valuable implied option.  Unless you get that perk, you’re at a disadvantage.

Why do stocks need to trade continuously all day?  Suppose that each stock only traded once per day.  The buy orders and sell orders are matched.  If your order doesn’t match the price, you have to wait until the next day.  That would be a simpler and more transparent system.  That wouldn’t let insiders scalp money off each trade.

If stocks only traded once a day, most trades would occur between two actual customers.  Middlemen would only scalp a little.

When stocks trade continuously, most trades occur between a customer and a State middleman.  The middleman artificially raises transaction costs, scalping a penny off each trade.  Sometimes, the middlemen manipulate prices, further raising costs.

Besides, the stock market is one big scam.  As a retail customer, you’re an idiot to buy stocks.  Your returns won’t keep pace with true inflation.

High frequency trading has no economic value.  It enables State middlemen to scalp money off each trade.  With a corrupt monetary system and high inflation, people are forced to invest to protect their savings.  The stock market is a huge theft engine, transferring wealth from non-insiders to insiders.

3 Responses to High Frequency Trading Has No Economic Value

  1. Anonymous Coward August 16, 2012 at 5:02 pm

    With taxation so high it is no longer economical for UK companies to explore for more oil and gas in the North Sea and the declining reserves, the UK no longer has enough cheap energy to manufacture real goods. High rents and taxes means the UK cannot complete with more switched on Asian countries. I feel that silly looking boy, Gidgeon Osborne (UK Chancellor) increased taxes for North Sea oil companies.

    I think FSK is being too hard. Without fraud, there would be hardly any economic activity in the City of London. Everybody would have to go home.

    Why should the UK get its hands dirty on North Sea oil, when there are clean office jobs stealing money!

  2. Anonymous Coward August 16, 2012 at 5:08 pm

    Without hedge fund stealing there won’t be any money for cocktail parties and balls attended to by the Conservative political party.

    Why is FSK begrudging politicians looted money?

    David Cameron and that silly arse Boris Johnson have nice plummy voices. We like our politicians to look posh, wear nice suits and speak properly. The Hedge Funds lubricate them with money.

  3. Off-topic, but the news reports say that 40 police officers are surrounding the Ecuadorian embassy in London and are in all the communal areas of the building.

    Anyone that does any basic research using the Internet will find out.

    1) The relevant Swedish prosecutor dropped the case against Julian Assange.

    2) The two women only had a problem days later and that was after they met each other.

    3) One woman made favorable blog posts about Julian and took a photograph of him, after the alleged misconduct. She then tried to delete the posts, but due to caching they were retrieved.

    4) One woman reported she felt violated by the police and felt they were putting words in her mouth. She refused to sign anything. She has left the country and is refusing to co-operate with the Swedish prosecutor with political connections from a city far away from where the events happened.

    At least 40 police officers are surrounding the embassy.

    My family had a sizable amount of money stolen from them. It is highly likely the thief would have been captured on close circuit television cameras. When the crime was reported to the police, they did NOTHING.

    A house near to us was being burgled. A neighbour telephoned the police and they refused to attend.

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