Steve Kroft gets a rare look inside the secretive world "high-frequency trading," a controversial technique the SEC is scrutinizing in which computers can make thousands of stock trades in less than a second.
you must have these things in mind 1. Have a long term mindset. 2. Be willing to take *risk*. 3. Be careful, if you're not spending to earn back, then stop spending. 4. Never claim to know - Ask questions and it's best you work with an assistant.
The wisest thought that is in everyone's minds today is to invest in different income flows that do not depend on the government, especially with the current economic crisis around the world. This is still a good time to invest in gold, silver and digital currencies (BTC, ETH. stock,silver and gold)
When it comes to Trade, I can confidently say that bitcoin is the best option. But most people think it's all about buying and leaving it to rise but It takes a lot more you need to trade it to earn daily.
Look for empirical facts about how markets work, don't trade something that someone on youtube said it works. Plus, you want to trade with orders behind you, not lines on a chart.
How cute. They thought computers would influence the market. Little did they know Jpow's money printing machine and wallstreetbets would be the great influencers
Trading as a beginner was very difficult due to lack on trading experience, this resulted in losing my funds though I've been able to recover all that I lost, all thanks to Mr Charles_forex09 at Instagram , i never knew good trader still existed till I come in touch with him.
In mid 2011 HFT was a secretive world limited to the top traders of the Wall Street. 11 years later, today, me, a boy from a small town in India is doing Ph.D. on HFT, after having already done masters in 2020. Things change so fast.
@@thandosisilana425 dude what are you talking about. He is a businessman/investor not a trader per se. The number of transactions he makes are way less than the ones made by the computers. He simply has the advantage of capital. If you took all his money away then he will probably not be able to pull it off again.on the contrary the computers will do it again and again for eternity.
I installed low-latency networks for HFTs and Investment banks from 2008-2011 in NYC and Chicago. This was a very interesting piece and quite interesting / bit of nostalgia for me. I've been in that NYSE data center several times, as well as NASDAQs in Carteret NJ several times a week. Arista was the big dog for switch technology back then, I'm not sure if they're the leader in low-latency ASICs anymore though.
Arista is still the dominant player in low latency switch as far as I am aware. Most HFT firms (if not all) still extensively purchase and use their products.
I work at an HFT, and yeah they're still top dog. They acquired Metamako, who were doing great things with L1 ultra low-latency switches, which has helped them retain that edge.
This is just good old fashioned "frontrunning" in the modern era. A long term investor won't be affected by this. The new guys are basically taking over the role of "Market Maker" previously held by NYSE/NASDAQ. They make the market and profit off the difference between the bid and the ask, which the old market makers had been doing for decades before computer technology hit the scene. These guys aren't using any special analysis to determine extended market direction, only micro moves a few milliseconds into the future. This means human short term/day traders who are not trading by the micro second can still do quite well trading patterns created by resistance and support.
Agreed. If you can switch your perspective you can get a great read on the price action watching the algos move. It's changed my trading significantly.
I'm not afraid of bots, in fact I really appreciate the liquidity they provide. Allows me to get in and out with ease. I kinda believe trading should be done by humans in any case. Price should reflect humans interest, activities, decisions and not base on some complex algorithms. This really does distort market valuation, at least in the short term.
Robert Moore . Great comment. I disagree slightly with it being a tautology, but I'm probably being pedantic. Can you explain your reasoning, I'm interested as I can't see it, although I believe you are right technically.
Alrachid I trade on Bitmex and sometimes close a position with 20% positive ROI just to end up with a loss.The charges are huge.How on earth these companies are doing any profits on a 3 seconds trades?All the profits should be eaten by the broker's fees and commissions,no?
Buying the downside dip can get you a higher amount of stocks. The stocks go up you make money. You can buy more than you could before at a lower price. So more money can be made...
Its stealing plain and simple! You buy a stock and they jump in front of you push the price up on your order. An example is: you order 100 stock units at a price, you only get 15 at your price and suddenly your price is slightly more, you then have to order more at the new price to complete your order of 100.
One day soon a trader will buy the security directly from the Company. And no exchange or go between will be needed or wanted. Cut out the middle man. All 10 of them.
Hey man this is great ...stacks, bands, ko-laderal, this is great for the ekanami........all our gambling is going to salve all the world's greatest prablems....of course a depression won't come about b'cas of it.
Computer don't mean a thing. A great trader doesn't care if computers are around because we use something much better. Its called a "Brain" lol This is our advantage!
Average investers are disadvantaged and are simply no match for hft, it is like fight between changez khan vs a simple pregnant lady. And the judges are praising changez khan fighting skills at the same time encouraging pregnant lady to keep fighting.
an algorithm is simply a list of steps to get from point a to point b. to make a sandwhich which steps do you need to do? that list would be an algorithm. They're not necessarily complex
I am that small trader that's headed high, but I don't fear hft. They fear it because their leverages are high so a small negative movement would mean billions lost. What matters mist is your entry position, just when the hft has shown them it is a pull back position
How do you know what’s a fair price when u are entering a trade, it’s all up to the algos and “investors” are dumb money if you are in it for the long haul you are stupid and will pull out ur money when ur 70 in a 15 year bear market, good luck hope it works out for you
Yeah, but it isn't anything new either. People have been doing this for ages. Just s lot slower. This is why I say this. Until the internet, and online trading, people had to go through physical brokers to trade, and trade based on information they get from newspapers. Now by the time retail traders got the news, and then make a decision, tell the brokers, and the brokers execute the trade, the rich inside traders have already adjusted the price based on the news. (They get the news much earlier than retail traders through inside connections) This is essentially the same now, except the bots can read and act on news much quicker than retail traders can.
thise gus don't provide liquidity, they only buy if they already see the seller and are frontrunning to see the arbitrage that would otherwise stay with buyer and seller...
Computer cannot tell how low the stock is going to go. Stocks can go up fast just as it can go down fast. This is very unpredictable. You cannot write algorithm to take advantage of stock markets volatility. The only thing it can do is make trades fast. Why is the guy in the video in a loss for 3 days with super computers? Every trader loses and gains in day trading. A lot of luck plays with day traders.
HFT is just computers buying and selling at a high speed. thats it. it doesn't affect long term investors or ordinary traders in any way. This video makes it look like something very scary and illegal by pointing some very rare incidents that have occured.
buuuuuut..... if it's so quick etc, then how can those computers sell in seconds? cuz u gotta order the stocks first... and when u wanna sell them it also takes time. So ur gonna tell me that computers don't have to wait until someone bought the stocks that the computer wanted to sell? or????
This piece is too focused on the unknown affects of what the HFTs can do to the market and does nothing to question the premise that HFTs use to describe what value they add to the market (ie add liquidity). Just because you are adding volume doesn't mean that liquidity makes for more stable markets and in fact as we have seen in the flash crash, it can cause disruptions. If only the SEC came in and promoted standards that synchronized all the exchanges better so the called value that HFTs add would be geared towards actually adding liquidity and not taxing the average trader. Something needs to be done but the SEC is too corrupt to do anything about it.
I HAVE INCURRED SO MUCH LOSSES TO TRADE ON MY OWN,I TRADE WELL ON DEMO BUT I THINK THE REAL MARKET IS MANIPULATED.
having a mentor is also very important when it comes to Trade, with out that, it can be very frustrating.
you must have these things in mind
1. Have a long term mindset.
2. Be willing to take *risk*.
3. Be careful, if you're not spending to earn back, then stop spending.
4. Never claim to know - Ask questions and it's best you work with an assistant.
The wisest thought that is in everyone's minds today is to invest in different income flows that do not depend on the government, especially with the current economic crisis around the world. This is still a good time to invest in gold, silver and digital currencies (BTC, ETH. stock,silver and gold)
When it comes to Trade, I can confidently say that bitcoin is the best option. But most people think it's all about buying and leaving it to rise but It takes a lot more you need to trade it to earn daily.
Look for empirical facts about how markets work, don't trade something that someone on youtube said it works. Plus, you want to trade with orders behind you, not lines on a chart.
How cute. They thought computers would influence the market. Little did they know Jpow's money printing machine and wallstreetbets would be the great influencers
LOL
Trading as a beginner was very difficult due to lack on trading experience, this resulted in losing my funds though I've been able to recover all that I lost, all thanks to Mr Charles_forex09 at Instagram , i never knew good trader still existed till I come in touch with him.
Ш77й99%ыяц
wait you're early
@@benji45645 from the future.
In mid 2011 HFT was a secretive world limited to the top traders of the Wall Street. 11 years later, today, me, a boy from a small town in India is doing Ph.D. on HFT, after having already done masters in 2020.
Things change so fast.
What are your sources?
Hey bro can you guide me in this field
you made no sense, what does HFT back in 2011 have to do with ur stupid masters in 2020?
How come this looks like it was made in 1982?
American suit style never has changed from the potato sag design of 1982.
Costa Michailidis hahaha
Maybe it is that old.
@@florianthomas7852 it looks better than todays "two sizes too small" looking suits that are trendy right now
@@kauigirl808 your kidding right ?
computers making billions in a blink of a eye, me have to wait 7 hours for $100 to go my way. Im catching up :) LOL
Don't buy into it to date Warren Buffet is still the king who hasn't been beaten by no computer.
Why do people keep pulling the word billion our of thin air lol. These high frequency computers only make pennies every second.
@@thandosisilana425 dude what are you talking about. He is a businessman/investor not a trader per se. The number of transactions he makes are way less than the ones made by the computers. He simply has the advantage of capital. If you took all his money away then he will probably not be able to pull it off again.on the contrary the computers will do it again and again for eternity.
@@thandosisilana425read about jim simmons
"robot computers" takin our jerbs
Dey tuk er jabs
Donald Trump Jr will deport Mexican robots!
don’t forget “math wizards”
Dey tuk er jabs.
Yes and we need to fight against these new terminators 😆😆
Coincidentally, transparency and fairness are 2 words that aren't a wall street dictionary .
Meanwhile it takes 3-10 business days to transfer $20 from one bank to another.
Lol
that's because they keep and gamble everyone's money in the mean time.
The delay is enforced by law
@@Nebbia_affaraccimiei It's called "the float"...
I love this word :" without short term traders there is no liquidity".
🤣🤣
I installed low-latency networks for HFTs and Investment banks from 2008-2011 in NYC and Chicago. This was a very interesting piece and quite interesting / bit of nostalgia for me. I've been in that NYSE data center several times, as well as NASDAQs in Carteret NJ several times a week. Arista was the big dog for switch technology back then, I'm not sure if they're the leader in low-latency ASICs anymore though.
so you contributed to this evil
Arista is still the dominant player in low latency switch as far as I am aware. Most HFT firms (if not all) still extensively purchase and use their products.
@@rickyy7802 thx for sharing, that’s interesting they have held on to the market all this time.
I work at an HFT, and yeah they're still top dog. They acquired Metamako, who were doing great things with L1 ultra low-latency switches, which has helped them retain that edge.
It's the evolution of the market. I trade manually but I'm always watching the algos movie and frankly it's to an advantage
Can we get a 2.0 of this? Id love an update
This video has a lot of weird faces
because we go down. sooner rather than later.
The idea is to not look rich, but be rich.
No one is talking about that IT Indian dude who is minting money.
This is just good old fashioned "frontrunning" in the modern era. A long term investor won't be affected by this. The new guys are basically taking over the role of "Market Maker" previously held by NYSE/NASDAQ. They make the market and profit off the difference between the bid and the ask, which the old market makers had been doing for decades before computer technology hit the scene. These guys aren't using any special analysis to determine extended market direction, only micro moves a few milliseconds into the future. This means human short term/day traders who are not trading by the micro second can still do quite well trading patterns created by resistance and support.
Agreed. If you can switch your perspective you can get a great read on the price action watching the algos move. It's changed my trading significantly.
Imagine what a quantum computer can do in the future for Wall Street.
Imagine if one is already doing for it in secret.
Darshan Singh I wouldn’t doubt it.
You can't imagine how a quantum computer works
nothing special
A quantum computer isn’t any faster than an ordinary one you dunce
I'm not afraid of bots, in fact I really appreciate the liquidity they provide. Allows me to get in and out with ease. I kinda believe trading should be done by humans in any case. Price should reflect humans interest, activities, decisions and not base on some complex algorithms. This really does distort market valuation, at least in the short term.
Link to the full episode?
We are lucky at least computers don't understand fundamentals yet. The one advantage humans have left.
I wouldnt be so sure of that....
They don't have to, They can drive markets their way.
they actually do already ;)
They do already, it's called a Bloomberg terminal
of course fundamentals can be programmed. That's easy, wait until you see AI, technical and fundamentals analysis combined ...
Uh folks, this is old info. The S&P was about a third of what it is now.
I'm convinced a futures exchange must also be selling client positions and data to these HFTs - some of the goings on are way to suspicious
Definitely dude, I'm sure the big firms also use these HFTs as a way to obfuscate front running trades too.
It took 4 years to get out in the open, but you’re correct. Robin Hood selling order flow to Citadel.
Pump and dumps
Ahso, if i know the technical protocol of the machines can i make money as a trader?
5:38 how most retail investors feel in 2022
LOL , "complicated mathematical formulas called algorithms", talk about a tautology.
Robert Moore . Great comment. I disagree slightly with it being a tautology, but I'm probably being pedantic. Can you explain your reasoning, I'm interested as I can't see it, although I believe you are right technically.
This isn't tautology; he was just defining a word, not using it twice.
A tautology would be "complicated mathematical formulas AND algorithms"
Redundant is the word you're looking for
Stop using fancy words. It just makes more confusuon
If you guys think this is wild you should see what they are doing in the bitcoin/crypto markets with no regulation! Its insane!
Alrachid I trade on Bitmex and sometimes close a position with 20% positive ROI just to end up with a loss.The charges are huge.How on earth these companies are doing any profits on a 3 seconds trades?All the profits should be eaten by the broker's fees and commissions,no?
because of the high volume they get a lower price by broker
Alrachid, Would like to know in details, please explain
03:40 what about trading fees?
They are brokers and have own licenses. They do not use robinhood
Ive always thought it was cool to see all those ppl yelling out buy or sell.
Wtf this was 9 years ago😢 imagine now!
Hey that's Jon Stewart's brother.
Refreshing.. Better than governments for sure
I need a Super Computers 🖥.
Buying the downside dip can get you a higher amount of stocks. The stocks go up you make money. You can buy more than you could before at a lower price. So more money can be made...
@@MrSupernova111 predict eh....look at a screen and see that it has gone down absolutely.
Video might be old but happened again this year
MATH WIZARDS
Math Wizards make algorithms, makes sense to me lol
Its stealing plain and simple! You buy a stock and they jump in front of you push the price up on your order. An example is: you order 100 stock units at a price, you only get 15 at your price and suddenly your price is slightly more, you then have to order more at the new price to complete your order of 100.
Louis Verheem Read: flash boys. This book explains HFT and how it started, same writer of THE BIG SHORT.
*10 years later
Lol look at me.. trading with a mac mini and a 10" monitor! 😄😄
One day soon a trader will buy the security directly from the Company. And no exchange or go between will be needed or wanted. Cut out the middle man. All 10 of them.
Its funniest when americans talk about Transparency and fairness 🤣🤣
If you think that's funny, then you haven't been to the EU.
@@1N73RC3P7OR 😵😯
Does this still exist?
" without short term traders there is no liquidity".
They fast af!!
This will end bad. Spectacularly bad.
6:40 Brother of Jon Stewart. Vice-President of the New York Stock Exchange.
'robot computers', 'supercomputers'... so computers?
Exploiting correlation in stock and exchange in other words creating waves and collect dipping, selling the bulging. That simple.
To be first you need to be quick
Lol. What if HFT out paced money supply in the future?
Hey man this is great ...stacks, bands, ko-laderal, this is great for the ekanami........all our gambling is going to salve all the world's greatest prablems....of course a depression won't come about b'cas of it.
Computer don't mean a thing. A great trader doesn't care if computers are around because we use something much better. Its called a "Brain" lol This is our advantage!
A fellow Martin Shkreli fan please watch out with impersonating Martin
Absolutely.
nah swear show me a link lool??@@MrSupernova111
3:30 Narang has very shallow emotional affect. He seems incapable of feeling or empathy of any kind.
Math does not understand human emotions. Programmers just code
and whats the problem with that?
@@ktolwal Nobody said there is a "problem"?
Do these companies still exist?
Can anybody say how stocks are manipulated??
In the movie Terminator - Skynet took over the world via technology, Skynet probably now choose to destroy humanity via the stock market.
Sell in a minute..no risk of share falling/rising. Trend capturing for 1 cent. Not bad at all. In face I'm a fool for taking the harder path.
I literally cant understand why anyone would find this bad.
The mini crash is a classic pump and dump ..Somebody with skilz had a good day :-)
How do they afford commissions?
sickflow does Goldman Sachs use TDAmeritrade?
Jonathan no robinhood. They don’t pay commissions
that´s funny
or they get deals with brokers??? Jesus this should be open info lol
These guys ever traded, lol, they have brokerage license. They pay direct fees to exchange
Average investers are disadvantaged and are simply no match for hft, it is like fight between changez khan vs a simple pregnant lady. And the judges are praising changez khan fighting skills at the same time encouraging pregnant lady to keep fighting.
an algorithm is simply a list of steps to get from point a to point b. to make a sandwhich which steps do you need to do? that list would be an algorithm. They're not necessarily complex
obviously stock trading ones are lol
And this was 9 years ago....
4:36 Listen to this that how it is.
They out here doing millions of trades and we retail traders have to deal with PDT
That's why people hate hedge funds
I am that small trader that's headed high, but I don't fear hft. They fear it because their leverages are high so a small negative movement would mean billions lost. What matters mist is your entry position, just when the hft has shown them it is a pull back position
eeeeeeeeeeeeeeeeeeh win big lose big big risk bigger margin teeeeeeeeeeeeeeeeeeeeeeeheeeeeeeeeeeeeeeeeeeeeeee!
but it at least benefits the computer companies though? right? And every other tool needed to stay in the game.
holy shit!
We are machines, shyam.
"Robot computers". Decade old terminology sounds laughable now.
Today it's bots. Not to much of a change.
This video itself is a decade older.
@@cs2874 well yeah, which is why the terminology is decade old.
In this case, it’s not the house but the neighbors that always win
Or buy high & sell low!!!
sure this will work in the short term, but buy and hold people aren't affected.
How do you know what’s a fair price when u are entering a trade, it’s all up to the algos and “investors” are dumb money if you are in it for the long haul you are stupid and will pull out ur money when ur 70 in a 15 year bear market, good luck hope it works out for you
imagine when quantum computers start being used..
Should they be allowed to compete with human beings?
I'm not at all qualified to say this but surely this is bad for the health of the markets?
Sure it is, manipulation of market .
Yeah, but it isn't anything new either. People have been doing this for ages. Just s lot slower.
This is why I say this. Until the internet, and online trading, people had to go through physical brokers to trade, and trade based on information they get from newspapers. Now by the time retail traders got the news, and then make a decision, tell the brokers, and the brokers execute the trade, the rich inside traders have already adjusted the price based on the news. (They get the news much earlier than retail traders through inside connections)
This is essentially the same now, except the bots can read and act on news much quicker than retail traders can.
$150Million PROFIT/yr ...not bad
thise gus don't provide liquidity, they only buy if they already see the seller and are frontrunning to see the arbitrage that would otherwise stay with buyer and seller...
supercomputers aka a MacBook Pro and think or swim platform lol
Best one
6:45 Fun fact that's Jon Stewart's brother.
y esto tiene 9 años, nvidia ni tocaba la ai en ese entonces...
Computer cannot tell how low the stock is going to go. Stocks can go up fast just as it can go down fast. This is very unpredictable. You cannot write algorithm to take advantage of stock markets volatility. The only thing it can do is make trades fast. Why is the guy in the video in a loss for 3 days with super computers? Every trader loses and gains in day trading. A lot of luck plays with day traders.
Fuck !!!! Am speechless
HFT is just computers buying and selling at a high speed. thats it. it doesn't affect long term investors or ordinary traders in any way.
This video makes it look like something very scary and illegal by pointing some very rare incidents that have occured.
buuuuuut..... if it's so quick etc, then how can those computers sell in seconds? cuz u gotta order the stocks first... and when u wanna sell them it also takes time. So ur gonna tell me that computers don't have to wait until someone bought the stocks that the computer wanted to sell? or????
They said 70% of trading is done by bots, so lots of volume.
Yes but there is still a chance that nobody wants to buy the order which the computer put, so then the computer is left with a not sold order
gaat jeniksaan Apparently, that risk is easily manageable by their quants. These companies have shown thousands of days of profits in a row.
This piece is too focused on the unknown affects of what the HFTs can do to the market and does nothing to question the premise that HFTs use to describe what value they add to the market (ie add liquidity). Just because you are adding volume doesn't mean that liquidity makes for more stable markets and in fact as we have seen in the flash crash, it can cause disruptions. If only the SEC came in and promoted standards that synchronized all the exchanges better so the called value that HFTs add would be geared towards actually adding liquidity and not taxing the average trader. Something needs to be done but the SEC is too corrupt to do anything about it.
They don't make strong enough coffee to wake this SEC up.
@@dont.ripfuller6587 More like the SEC is too in bed with the entities they are supposed to regulate.
IM just imagining what they do on 2023, this was 12 years ago!!!
Proud to have build my own algo bot with a return of 30-40%...per month 💁🏼♂️
Hello mrapfel
We are so happy for you... trust me
Larry Leibowitz is Jon Stewart's brother.
Computer Robots...
In this interview i felt like interviewer was angry.
@Harry Smith Probably.
crazy
these should 100% be outlawed
pump-n-dump ?
I wonder If those computers are using AMD or INTEL chips 6:26
Intel forsure.
@@GettinUp Probably 👍
How are they cheating the taxes on that?
So its Pay to win?
if (stock.price < 4.2) { sell(100 tickets) } else { buy(10 tickets) }
"complicated algorithms"
Sec needs to make it illegal
insethurdle88 EU is doing it now, they want it to make illegal to hold stocks for less than 0,5 second
insethurdle88 nope they made it legal
@2:45 "... humans are not involved in the trading because humans are way too slow for the kinds of opportunities we're trying to capture ... " ~●~
i hope this does not happen again
Just another form of insider trading.