[ggm]

Yes, good analysis. Whats the goodput (the net social benefit) and whats the badput?

Do I (for instance) pay more? I suspect I do. I suspect the intermediary sniping in, forces prices up to their advantage. The dis-equality is being abused, to extract rent from me because I am slow. HURRY UP! Bidness waiting.

Which means, overall, we all pay more. This is cost shifting to make money, by snatching goods in flight, and charging a minim to pass them on. The intermediary has no intention of doing anything except profiting. they aren't holding, they aren't helping.

I'm not a free market person btw. So, I'd probably say that about a lot of behaviour in 'the market'

[vostok]

I suspect that I (as an individual investor in my retirement account and personal investments, not as an HFT) pay less.

My mental model is that pre-HFT, banks and other market makers made a lot more money per share traded. HFT outcompeted them and the HFTs make less money per share. I, as an individual investor, get to keep more of my money and less of it goes to various intermediaries.

[deltateam]

"goodput"

-you pay less for an order -it takes less time for your order to get filled -more efficient pricing -liquidity ripples out into risk management products derived from thick order books -easier to manage risk -lower cost of transaction

"badput"

-hard to compete against the liquidity providers -they have unparalleled view of order flow, which runs counter to a market with fair equal access to information

[Dylan16807]

You forgot to mention the part where they're getting paid to provide this liquidity.

So prices are some pennies more efficient, but some of the trading money is going to the pockets of high frequency traders.

This is good! To a point. Eventually the price tag of improved liquidity could be higher than the value of that liquidity.