[brownegg]

They don't get unnecessary volatility unless they're paying attention to the order book all the time. Realized equity volatility is MUCH MUCH MUCH lower in the era of HFT.

Yes, "flash crashes" exist, and normally because of liquidity disappearing. Yes, algos are basically sheep that all bail at the same time. But overall, the net effect is massively beneficial to everyone except lazy traders (which include fund managers who miss the days of getting lots of steak dinners from their favorite brokers).

[digler999]

I'm not arguing against algos or HFT, just spoofing. also I updated my comment to ask about level-2 quote information. If people are stupid for acting on perceived intention of other market participants, wouldn't that make the case that L2 quotes are entirely garbage and should just be removed from the exchange ?

[brownegg]

You're conflating two things (in my mind). L2 is very useful to people like me. If it's useful to you, you should be able to handle spoofing.

The "average investor" doesn't need L2, and doesn't care what it says, including flashing "fake" orders.

[baloneyman]

HFT doesn't really do anything for markets since they take very little risk, and that is the purpose of a market... the magic coil will kill your business anyway

I thought true HFT (not short-term momo, etc. where the intention is to actually take risk) had essentially died already, Virtu aside

[pgwhalen]

True HFT is not in any sense dead, it's just matured so only those with deeper pockets can compete.