Tradebot had zero trade-lose days in last 4 years

The entire movement against automated / high frequency trading is a hoax.<p>Remember how much Dick Grasso was paid as head of the NYSE? Typical exchanges charge substantial membership fees and reap massive profits.<p>In the age of computers the traditional exchange becomes a lot less valuable, since it's easy to match buyers and sellers over any computer network.<p>The law requiring all trades to be filled at the lowest price was motivated by major exchanges not wanting to be cut out of the action (even though a trader might be OK with getting not quite the lowest price in exchange for much lower transaction fees overall).<p>Also, the majority of HFT platforms run off of the major exchanges on private networks that only sometimes pass orders on to the rest of the market. The more liquidity/volume occurs on these smaller networks, the less relevant the older established players (NYSE, NASDAQ) become. Exchanges have traditionally been gatekeepers charging fees to use their monopoly product.<p>This battle has been going on for a long time (and so far the upstarts have been winning in spite of the hurdles imposed by the influential old timers).<p>FUD about algorithm based trading strategies is just a part of this larger battle and it's 100% nonsense.

I'm dubious on this matter. While, yes, high frequency traders are (in some ways) making the market more efficient, it is still extremely difficult to think that a hyper-efficient but potentially unstable market is preferable to a moderately-efficient but much more robust market.<p>I mean, a bug in my coding means someone potentially doesn't get an email with a download link. A bug in theirs potentially means millions of shares are tossed around, possibly even confusing other "well-coded" terminals to trigger a feedback loop.<p>I am interested to know if the stop command was a "save your own skin" move or a "save the market" safeguard.

"Tradebot, one of the biggest high-frequency traders around, had not had a losing day in four years, he said."<p>Bernard Madoff used to have a reputation like that. I rather suspect that the only way to be a winner that consistently is to do something as shady as what Madoff did.<p>After edit: noting downvote, I'll give one example of a possible shady practice in this industry mentioned in other comments on this thread. Not following the price time rule, which the trader mentioned in this thread says can happen "unwittingly," despite a regulation requiring the first order placed to be the first order filled.

<i>Unlike old-fashioned specialists on the New York Stock Exchange, who are obligated to stay in the market whether it is rising or falling, high-frequency traders can walk away at any time.</i><p>Can anyone explain what the first half of this sentence means?

So, this is kind of off topic, but the guys from Tradebot also run a local venture fund called Tradebot Ventures (<a href="http://tradebotventures.com" rel="nofollow">http://tradebotventures.com</a>) that the last company I worked at was funded through. The founder, Dave Cummings, also founded a stock exchange here in Kansas City called Bats Exchange, where one of my brothers works.

<i>“Several high-frequency trading firms that I know about stayed in the market that day,” he said, “and had their best day of the year.”</i> Some of the very biggest HFT players stayed in the market, partly because they are obligated to being liquidity providers, and retrospectively because it became a very good day for those that did.

Why don't more people do this themselves?<p>Every few months a post like this comes up on HN or Reddit and the general consensus seems to be that Goldman Sachs etc are too smart, too fast and too good to compete with.<p>I got a bit curious and did some digging, and it turns out that yes, some people are doing it themselves, quite successfully. See <a href="http://www.elitetrader.com/vb/forumdisplay.php?s=4a039395d01ceaced87f28585ba24e5d&#38;forumid=48" rel="nofollow">http://www.elitetrader.com/vb/forumdisplay.php?s=4a039395d01...</a> for example.<p>I for one think this looks doable.

I guess it makes complete sense that the markets would plunge simultaneously. Tradeworks had to dump their inventory all at once, otherwise other high frequency tradebots would have been tipped off.<p>BTW, that high frequency trading is good for the market because they provide liquidity, is bullshit. High frequency traders do not trade in stocks with low volume (because it is risky), so they don't add any liquidity that wasn't already there.<p>There's no legitimate reason, AFAIK, for high frequency trading to be allowed. All they do is syphon away our milkshake in transit from Alice to Bob, because their speed allows them to.<p>We should be taxing these quick buy-sell trades. At least that way more of the money goes to benefit society. Some equation that taxes at the rate of:<p>80% profit tax for selling stocks held 10 minutes<p>50% profit tax for selling stocks held 1 hour<p>10% profit tax for selling stocks held 24 hours<p>no tax for selling stocks held 1 week<p>seems quite fair, would have zero impact for real investors (who are investing in wealth creation, not money creation), eliminate these crazy price fluctuations (that could damage unsuspecting investors' portfolios with stop-sell orders that were meant to <i>protect</i> their investments), and generally help everyone live more meaningful lives.

Can anyone in algorithmic trading/investment software suggest a good place to start reading and learning about the subject? In particular, I'd like to learn about investment strategies and algorithmic trading. It seems like many of you work in the field and know quite a bit about the subject, whereas some of us are on the outside trying to look in.

Much has been made of Kurzweil's idea that computers will eventually overtake the raw processing power of the human brain. I wonder what will happen economically if/when software market algorithms become more efficient than the distributed human-driven algorithms of today. (And I would wager that the latter will happen well before the former.)

Firms like this do tens of thousands of trades per day. It's just a consequence of the law of large numbers.