Determining value of a thing IS how well it does in a popularity contest. That's all economics is. If your apples are fundamentally less sought after - and popular - than my potatoes, your apples are cheaper than my potatoes.
60% of all US equity volume is pure high-frequency trading, and ETFs add roughly another 20% that’s literally just bots responding to market activity and bearish-bullish sentiment analysis on public(?) press releases. 2/3 of trading funds also rely on external data to price in decisions, and I think it was around 90% in 2021 use trading algorithms as their determining factor for their high-frequency trade strategies.
At its core, the movements that make up the market really IS data retrieval.
Sort of. I've addressed this with another commenter already [1]
>"What? THAT CASH comes from owning the inside spread on roughly half of every US equity share that trades. They quote a micro-price adjustment, and it pushes out anyone slower - which exactly the “service” that lets retail investors, like us, hit a bid or ask.
>
>Honestly, whether YOU want to call that trend-following or market-making - I can't be arsed, but it’s still data-retrieval that runs THE institutional scale"
I find this comment chain becoming cyclical, so I'll likely end it here.
tell that to the derivatives market. It should be obvious that the stock market is divorced from actual value. fundamentals are meaningless now, there is zero penalty for failing to deliver securities, and 95% of all retail trades dont even hit lit markets. Price discovery doesnt exist and neither does the concept of a free market. Open your eyes and see that the market is a sham ponzi scheme where siphoning real value out kf the system is its main objective.
"While estimates vary due to the difficulty in ascertaining whether each trade is an HFT, recent estimates suggest HFT accounts for 50–70% of equity trades and around 50% of the futures market in the U.S., 40% in Canada, and 35% in London (Zhang, 2010, Grant, 2011, O’Reilly, 2012, Easley et al., 2012, Scholtus et al., 2014)"
In my original reply, I used the literal median of that spectrum @ 60%
Jane Street - who has recently found themselves in hot water from the India ban - disputes that AI summary ALONE. Per https://www.globaltrading.net/jane-street-took-10-of-of-us-e... , Jane Street booked 20.5B in trading revenue, primarily though HFT's, just in 2024.
Brought to you by someone who takes these market movements too seriously for their own good.
20 billion is a tiny fraction of the value represented in the stock exchange (and a tiny fraction of the profits made on it). HFT by its nature makes for a lot of volume but that's just a lot of shuffling of things around to peel a tiny fraction of value off the top, it's far from driving the market and the market isn't what makes the value in the first place.
And potatoes don't grow nearly as much economic value within industrial societies - as they do in, say, agrarian ones. All to say, I don't understand your point.
The percentage is irrelevant without knowing how they really work and how much profit they make. They could be at 95% with 0.1% of margin it wouldn’t mean much for the market.
At the end of the day talking about HFT this way is to not know what they do and what service they offer to the market. Overall they are not trending makers but trend followers.
What? THAT CASH comes from owning the inside spread on roughly half of every US equity share that trades. They quote a micro-price adjustment, and it pushes out anyone slower - which exactly the “service” that lets retail investors, like us, hit a bid or ask.
Honestly, whether YOU want to call that trend-following or market-making - I can't be arsed, but it’s still data-retrieval that runs THE institutional scale
Even if the HFT market is 100 times the smallest estimate, it's still a relatively small portion of the world economy, which is approximately $100 trillion. HFT is a fascinating intersection of finance/C++/JVM for competitive super-nerds. It happens to add liquidity to the market, as far as I understand. I am not demonizing it in any way.
However, it's not a significant portion of the US or global economy by any stretch. The argument over whether it sets or follows stock prices is mostly philosophical at this point.
>"HFT is a fascinating intersection of finance/C++/JVM for competitive super-nerds. It happens to add liquidity to the market, as far as I understand. I am not demonizing it in any way."
>"The argument over whether it sets or follows stock prices is mostly philosophical at this point."
