Sucking 'Em Dry Bitchez

CalibratedConfidence's picture

The Industry Super Network released a study recently regarding the long-term effects of HFT "activities" on regular Mom and Pop investors highlighting a conservative range of loses between $1.6bn to $1.9bn annually.  This slow bleed is driven through,  well,  payment-for-order-flow which revolves around a desire to internalize (reference Part 2) various generic, simpleton style order types, you know the limit and market orders (See Rule 606 Reports).  As different brokers sell order flow, order-types not available to their front end clients are being used by their back end clients to pick off sub-pennies at a consistent level

The following chart will show:

  • Group A: Non-HFT investors (Investor A) whose orders are filled and thus receive price improvements from HFT.   
  • Group B: HFT who can quote up to four decimal points.   
  • Group C: Non-HFT investors (Investor B), whose orders were stepped ahead of by HFT, this group is left with unfilled orders.

And with this comes Jim Cramer (have you heard of his Charitable Trust?) and his gems of advice because after all, he's not here to make friends, he just wants to make money.  Via the shill outlet that is CNBC:

Individual investors should put limit orders, not market orders, underneath their favorite stocks. And he thinks corporate treasurers should make sure their buybacks have orders at every price down....Since the government has repeatedly endorsed high-frequency trading, Cramer said, it doesn't matter if it produces no value.

Now Cramer has even admitted that he has researched HFT very deeply and that even was claiming on May 6, 2010 that people should be buying Proctor and Gamble, although he had no idea the prices he was seeing, were anywhere from 30 seconds to 80+ seconds old (also note the video you can play, the evidence and times are right there, see for yourself).  Note in the written CNBC piece he mentions nothing of the order-types or the potential detriment to the integrity of Best Execution practices.  Anyways back to the May 6, 2010, during all this mayhem, people with the proper systems and with the orders-types coded into their platforms (because All-Or-None-Post No Preference Blind Limit Orders aren't offered standard on any Scottrade or or otherwise generic retail broker) take advantage of these "limit orders" because the price thresholds are now well known.  Given the performance of the NYSE Arca Equities Order Type Usage, it would be a safe to bet that Mary Jo won't try to stop this from continuing any time soon, regardless of the NASDAQ complete and utter fuck-up of the Facebook, Fleecebook, Fadebook IPO.   Bravo again to Jim for his expert work in helping people make money, just not the people he claims, not his viewers, another P.T. Barnum Show folks.  Good thing this one hasn't shown he is running a business taking subsidies from the Connecticut government based on the number of employees he has, hat's off to you too Keith McCullough.

Anyways, enjoy the read, it's a real stitch.  It's not very long and there are a couple pretty charts but one stands out to be particularly helpful:

Watch your back:

 

Fair Game or Fatally Flawed by calibrateconfidence