Scalping & HFT does add liquidity

wzero

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It's not Algos take liquidity nor market makers add liquidity essentially. VOLUME is the true liquidity. Market makers actually do NOT ADD volume but DOUBLE the volume by act as a mediate party. Say it was A sell 100 shares to B the volume is 100, now market makers come into play it become A sell 100 to the market maker, then B buy 100 from the market maker. The volume doubled, Thus the liquidity doubled. There are stock markets without any market makers with huge volume and liquidty in the world.
Imaging if Algos or HFTs remove liquidity and inceased spreads, this becomes an opportunity for other Algos and HFTs to benifit from the widen spreads by scalping the spreads. It usually need an ECN or DMA broker to do that, but as long as there is such an opportunity, capitals will come in. Someones worry HFT may take all the liquidity and spreads are widened. Say if EUR/USD spread is 10 pips all days, isn't this is a good opportunity to write your Algo to add limit order insde the spread and take almost free money.
The culprit is not Algos and HFTs, the culprit is the borkers don't allow traders take advantage of widen spreads by add limit order inside spread.
 
So you are saying it's better if eurusd was 10 pip spread with inside the spread orders allowed instead of 1-2 pip spread and inside limit orders NOT allowed??

How long have you been trading?

Peter
 
That's sure as long as there are other HFTs take your limit order (remove liquidity) immediately before the market moves 10 pips away. But this won't happen because you have to compete other players who want to do the same thing, spread will be narrowed immedately.

I have been trading for three years, now I'm consistently profitable by scalping the market. 20 pips a day, 10 winning days in a row.

I'm Chinese, sorry for my English.

So you are saying it's better if eurusd was 10 pip spread with inside the spread orders allowed instead of 1-2 pip spread and inside limit orders NOT allowed??

How long have you been trading?

Peter
 
It's not Algos take liquidity nor market makers add liquidity essentially. VOLUME is the true liquidity.

Wrong. Volume has little to do with liquidity.

Good liquidity means plenty of traders, all doing their thing, which is why a market that does 100,000 lots in a day can be really liquid and a market that trades 1,000,000 can be less liquid.

Liquidy therefore always relates to the amount of players in a market, rather than the amount of volume.
 
"the borkers don't allow traders take advantage of widen spreads by add limit order inside spread."

who doesnt allow you to do that ? you can trade currency futures on cme

u can say that market makers do not provide more volume...theoretically at least. when there are two market participants one is selling and one is buying the volume might be 100.000 but that means zero liquidity in the market
 
" VOLUME is the true liquidity."

Wrong. Go sit in the corner. Do not masturbate. Do not collect cookies.
 
Market makers do provide provide more volume, as I said above, they doubled the volume.

u can say that market makers do not provide more volume...theoretically at least. when there are two market participants one is selling and one is buying the volume might be 100.000 but that means zero liquidity in the market

That doesn't mean zero liquidty, that means there was a liquidity provided and a liquidity was taken. You could always compete with the liquidity taker by either time or price.
 
My term of TRUE liquidity is not "orders waiting in the book". "Orders waiting in the book" is just false liquidity, or an illustion. The true liquidity is "how easily and timely you can buy/sell in good price and large volume". Liquidity means nothing If you don't care of the price, there is always many people compete with each other to take the other side of your trade if the price is extremely good for them. But with orders waiting in the book for example at bid price 1.00, this hinders you to buy at price 0.99, thus takes the true liquidity. If you are willing to pay higher at 1.01, as I said liquidity means nothing to you if you don't care of the price.

" VOLUME is the true liquidity."

Wrong. Go sit in the corner. Do not masturbate. Do not collect cookies.
 
liquidity is the possibility for all market participants to buy/sell anytime, without causing a movement in the price by this
 
Liquidity does not only mean how much you can buy/sell anytime without casuing any movement in price. Liquidity (especially for institutions) can alos mean how much they can buy/sell in a range of time with price movement in a range. These two may not always the same, HFT can provide lquidity for the later ones.
 
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