hft

Dear friends,

About High frequency trade (HFT) I understand is fair to produce a very simple and quick logical conclusion.

Nobody wants to produce a theory against the modern times or the inevetability usage of machines.

The problem is the "wrong" or "unfair" or "ilegal" usage of this equipment.

One example that shows how unfair(in spite to be legal) one HFT trade can be..

The market is up.. how you know ? all asx200 is going up, KAR share is going up and suddenly comes on board the follow bids

KAR last price 6.45
Offer 1 share 6.44
Somebody buys
Offer 1 share 6.44
and so on..
All the time the screen shows the last bid(and the HFT always will be the last) shows 6.44.

Than somebody buys a big lot and we jump to 6.46
Than the HFT begin
Offer 1 share at 6.45 and so on..
Keeping that action you permanently give the market impression the force is to down side..

You can raise the issue that..If the market force is strong enough the HFT can't promote this movement,this just works in weak market...

No, also is not true.

In good movements they force very soon the market achieve too fast the TOP..as soon (in a normal days without any announcement) the share lets say its up 3% everybody is scare to buy on top with so huge grow in one day and people (mainly traders) begin the process to sell... the end of process you never know..(but the HFT knows)

Basically the trade of 1 share is dissuasive,create a rubbish and confusion,doesn't attend any interest of liquidity of the market(like they love to say) and just can be used my people with manipulation mind... Definetevely not investors tools.

Cato