You explain it so well. I had a rough understanding of this before, but now it's crystal clear - particularly the flash crashes.

I watched this 2 years ago. This has changed my trading game for ever. Its important for individuals to understand this, especially if you want to trade.

Came for the weed, stayed for the very well produced presentation. Keep it up.

WEED is doing a very good job explaining this with easy to understand animation! thank you.

It’s worth noting, spoofing (as mentioned at 5:20) is absolutely illegal. The SEC does not mess around and if you are caught doing this the punishment is severe. As a general rule of thumb, the law states it’s illegal to send any orders to the markets which you do not intend/want to have executed by another trader. Edit: quote stuffing is also generally illegal, although harder to prove and therefore regulate.

The best video of HFS by far at KZfaq. If Up to date version for 2022 is being considered, that would be awesome.

The HFTs are pure liquidity extractors. What a phenomenal quality since 8 years ago! ❤

The best I've seen high frequency trading explained. I understand now. Thank you!

Great video, I made sure to like and share it. You did well explaining a complex topic including solutions = bravo

This is brilliantly done. Thank you,

*"weed"*

A beautifully illustrated and highly absorbable explanation. Thank you.

Excellent and well informed video! Thank you for your effort!

Thank you, Germany! Great video .... awesome!

Very effectively you have explained the complex system in easy way.

Saw a video by a guy from RBC on this. The way to counter it is to trade smarter, not faster than your competitors.

A well explained video ,Trading stock/forex should be transparent I'll rather leverage on service offered by recommend expert in trading, I invest and earn with a financial advisor who assist me in the right form and help me in achieveing my goals.

Nice video you and mr pavil Conrad are really helping my life in trading thanks .

Many comments are question on a financial transaction tax (FTT) and why it is not implemented yet. So I want to try to answer that for everyone, instead of replying to each comment. First of all, it is very important to clarify who actually has to pay the tax and on what transactions and securities it applies. Another interesting question might be how high a transaction tax should be. I have no definite answer for this, but I can give an example: In 2012 a transaction tax was implemented in France, only for stocks, and market makers (in other words High frequency traders or HFT`s) were tax exempt. The tax was 20 basis points on every transaction, this equals 0.2%. Now let`s assume everyone has to pay the tax and it applies on every security (including bonds, futures, any derivative and stocks, commodities and stocks): institutions, high frequency traders, and "normal people" alike. This has several implications. First of all, the state would generate a decent amount of extra money as tax income. Some also argue, that this punishes "noise" or useless trading that does not help price discovery. This is also referred to as uninformed trading, as opposed to informed trading which benefits price discovery. By reducing noise trading, the volatility in the market should go down, which implies less uncertainty and less risk. Besides, such a tax should punish "short- terminism". This implies mostly to stocks. Since trading often is punished, it is expected that the shareholder composition of componies changes to shareholders to hold a share for long time periods. It is also expected, that such shareholders are interested in a more sustainable business instead of quick profits, thus enhancing corporate governance. Others argue, that the introduction of a such a tax, decreases liquidity in the market since it increases the Bid- Ask Spread. The Bid- Ask spread is the difference between the current best buy and sell price. In other words, the higher the Bid- Ask spread, the higher the trading costs. In an extreme scenary where the bid- ask spread is incredibely large, no market participant is willing to cross it anymore and no trades are made at all. Our case is a weaker form of this extreme case. Still some are willing to trade, but not as many as before, since the trades are less profitable. This lowers liquidity and increases volatility, which impairs market quality and price discovery. There are some further reasons for this, concerning the depth of the limit order book and liquidty providers, but that really takes it too far, It might also lead to less or slower consumption of arbitrage opportunites. The combination of both effects decreases market efficiency. This is it :D that is basically the debate, and since there is no consensus yet, transaction taxes are not implemented yet, at least not for longer time periods. As a little bonus, a very specific negative externality: All Banks have an optimal, individual risk structure that each bank always tries to hold. In simple words, it is the optimal risk reward trade- off for them (this goes beyond simple profitabilty, it also includes further damage to society etc.). Thus, the entire financial sector has a so- called risk equilibrium. Whenever a Bank enters a new position, for example buys bonds from a fund, the bank deviates from its optimal risk structure. Thus,the bank either sells the bonds again, or it hedges its position. Either way, the bank trades most likely with another bank. Now the other bank deviates from its optimal risk structure. In short, one transactions triggers many transactions- also referred to as a ripple effect- and it takes many many transactions until the risk equilibrium is found again. Now consider the introduction of a FTT. This impairs the banks ability to trade, as they might be unable to find a trading partner, or it might be unprofitable. Also, the FTT reduces liquidity in general. The combination of both effects leads to less optimal risk distribution within the financial sector, thus destabilizing the system and increasing the risk of a systematic crisis. I hope this was helpful. Maybe it helps some to understand why policy debates are not just black and white and not everything that seems "fair" at first glance is actually a good idea.

That was SUPER good and clear, thanks!

This is an awesome video! Well explained :)

I HAVE INCURRED SO MUCH LOSSES TO TRADE ON MY OWN,I TRADE WELL ON DEMO BUT I THINK THE REAL MARKET IS MANIPULATED.

WELL EXPLAINED! Thank you very much!

Isn't the whole quote stuffing/spoofing thing illegal? Sounds like market manipulation to me

Greatly explained, thanks mate!

Incredibel Video!! Good Job! :)

such a high quality production.

I like recommendations at the end. Really excellent

Great video. HFTs run the market. The goal is to beat the algorithm, which is impossible. The market is manipulated.

good explanation, that was pretty interesting

nice explanation for some good tricks :) good job

Thanks for this simplified explanation

Very good explanation of the market.

How did they fail to impose half second of holding period?

Thank you for really informative video

Is there an update for the shown regulations?

Got my attention at the beginning with WEED

Thanks for the excellent video. It blows my mind how smart some people are out there to come up with this kind of stuff.

Excellent visuals!

best explanation, thank you!!!

Excellent video! 👍🏼👍🏼

Best explanation I've ever seen, please link patreon donations or something at the bottom of your vids boss

Some dank stuff you got there

I don't agree with the liquidity part since market makers are hfts and can only do their job if they have fast execution. They also are obligated to offer both sides. There is also strict regulation around manipulation such as spoofing and quote stuffing which makes them happen highly infrequently. There is definitely a discussion to have however on if current regulation is enough

Very well presented

great video. thank you

Excellent video

1)if you know which price to buy and on which price to sell if the majority uses this method than high frequency traders won't be able to play their tricks on anyone 2)every stock exchange must make the refresh rate of each stock to be changed for every 500 millisecond -1 second not less than that so that everyone gets access the same order book prices

awesome video thanks

it's really nice video..

Does this video explain why, during my sojourns into the world of day trading, I would have done MUCH better if my tactic had been to always do the opposite of what seemed logical? I remember I couldn't help concluding that some kind of foul-play was in operation.

Very informative stuff

Helpful. We are in Kansas! Thanks.

Really good video

Great video, views should be in the tens of millions

Hi! I'm Simone and I really appreciated this video, it is super clear and it gave me inspiration to decide what to deal with in my master degree thesis! Could I get in touch with you to know more about where you got the information, which sources did you consult? It would help me a lot in defining some literature on the subject to go deeper into it!

Great video. In gonna go park up outside the stock exchange with my RobinHood cellphone. 📈😗

Why an perfect video like this doesn't have a subtitle?

It's very useful to deal digital savings on bid&ask of time added value in Economy 4G3W

What is a reliable forex broker to trade HFT ?

Well explained.

I was in DFEN which is a leveraged Defense ETF. It doesn't have a lot of volume. When I went to take profits I kept seeing the order book change before my order hit. I eventually had to sell low to get out. It's annoying.

Great video

Today at 9.29 with 57 seconds. The stock for JMAI was at 49.76 and for 1 second went down to 43. Of course clearing all the stop loss orders people put and buy oil ng the for 43 dollars while worth 49. In less than a second. How do you compete or prepare for that type of cheating

You know what - I am not a HFT trader and it really does not bother my success rate. I use old fashion methods ,but use technology to make make my old fashion methods work more efficiently and faster. It makes it easier to process price and volume information which provides the elements to make a trading decision quicker. I love the volatility and the low costs that creates profit opportunity if HFT is behind it well good. I have been a 30 year veteran stuffing, spoofing etc. have been around for a long time even before computers where invented.I guess the difference today is that computers do a better job at it as compared to the snail's pace moves that humans are capable of. My point is that people have to learn how to adapt to the reality of the times. HFT contrary to what the institutional funds and retail clients complain about if a stock or commodity is in a trend due to basic fundamental reasons the market will eventually take prices to a level dictated by fundamentals and not due to HFT. Maybe HFT makes the move harder to catch ,but in the end fundamentals will prevail and no amount of HFT will change that. Likewise, if you are an investor who buys and sells stocks infrequently maybe 1 to 2 times a year HFT will not change your ability to buy and sell at a fair price. So if you are an active trader and not an investor instead of blaming HFT and any thing else that makes life harder learn to survive and develop the skills that are needed to conquer. If you can't handle it then get a 8 to 5 job and be happy. Traders who create daily cash flow and eat what they kill need liquidity and volatility. I know I am ranting ,but I have heard enough BS on the evils of HFT and granted that many of the points raised are true,but debatable. Life is not fair so as they say if Life gives you Lemons make Lemonade!!

HFT is the reason why I don't day trade. They don't really have any effect or at least much less effect when keeping a position for a longer time.

Why not make these HFT register to be able to use on the market and tack on a time delay to compensate their sheer speed?

This is pure Kabala/Mammon and it has nothing to do whatsoever with the real world. An artificial/speculative, immoral, illegal, unfair, exploitation of the weakest practice. Creating money out of nothing only creates voids of economical, social, psychological nature which leads ultimately to a soulless humankind P.S. the content is extremely well done and simply presented. Occam’s razor in practice. Thank you!

thank you so much

how make it

very nice slide！

Since this information is almost 4 years old, were any regulations put into effect to offset this type of stock scalping?

The odds are always stacked against the little guys.

thank you!

thank you

great video. always wanted to know what the hub hub is about.

is it possible to do this in binance crypto trading?

Great job

This is why there are so many online trading courses and apps nowadays. It's a market in which money doesn't come from work, but from speculation, so you need a consistent foundation of unprepared but confident traders to throw you their money without almost realising. Those adds are dangerous scams

Thanks for posting this. Well-done.

This is the best 10 min video for a better capitalism.

Does anyone know how to trade on IEX? At least they seem to have addressed this problem.

It's funny when you witness the loops happening and the quotes jumping around in a repeated pattern.

Great video. This goes to show HFT-A machines have a clear edge. Spoofing ... unregulated. Wow. No wonder 95% of traders lose! How many times when you buy or short something and it automatically goes to the opposite side.

I wonder if they're is a link between property prices, even residential housing and how close they are to exchanges.

Wait a minute? How do these computers cover the spread in millseconds? Spreads dont move that fast.

Well explained

This is why I invest in physical stuff like land, gold, businesses, eff the market and hallow shares...

Thanks

Best video I've seen on this topic. Many thanks for sharing!

yesss.. yesss.. 'Free markets'

6:23 - all today's markets have curcuit breakersand price collars. In some imaginary market yes - the price can fall down to zero, but in reality the trading is just stopped as soon as the price drops or rises below/above the limits.

great video! i don't really care though, my average holding period is about 2-3 days

Watch the movie "Hummingbird project". It shows how the back end stuff goes on..

you hinted at it. . . but let's not forget brokers' incentive to keep volume high. You say 'traders' with access to HFT technologies incur benefits here. . and they do of course . . but many of these are large brokers and marker makers . . like Citi. so HFT traders get their market advantage. and brokers benefit from the additional (or "new normal") amount volume. so. . . a lot of market participants don't want to see any regulatory change that would level the playing field for ordinary traders

is there any course as a beginer? Thanks

Why does a stock flip back and forth by a few pennies all trading day? (While showing volume moving) are they trading thousands of shares for a few cents profits? 3 cents × 10,000 shares = ....

Once again, I say thank you WEED.

I like how the graphic for the algo code is just random.next() over and over haha.. hft's influencing our markets are really just trading at random lol

anybody use Westernpips for arbitrage trading and hft?