[logfromblammo]

They don't. "Creating liquidity" is the weasel term they use to justify making money off of trades that would have happened anyway without their help.

The trade clearing systems themselves create all the liquidity that anybody needs.

If anything, they insititute a tiny tax on larger trades, such that there is a tiny deadweight loss to the market every time they front-run somebody. It isn't enough to be very noticeable on a single asset, but it is a positive and nonzero amount that is destroyed each time, and that can add up. To what, I have no idea.

[harryh]

Did you read the blog post? They aren't "creating liquidity" they are "selling liquidity." And if you're asserting that nobody needs it you really need to provide an answer for the question:

Then why are people buying it?

[logfromblammo]

Maybe they are not spending their own money?

[harryh]

So the people complaining about being ripped off by HFTers aren't forced to trade with them, but they do so anyways because they don't care because it's not their own money? Then why are they complaining about being ripped off?

This comment doesn't make any sense?

[logfromblammo]

If I put $10 into a 401(k) and lose $0.0001 of it because the fund manager didn't bother to protect me from fast middlemen, because it doesn't benefit him at all, am I still entitled to complain?

[harryh]

Sure, but you should complain to the crappy fund manager you hired to do a good job for you not the person who the fund manager was competing against.

You also might want to switch to Vanguard. They do a good job and realize that HFTers have dramatically lowered costs for them and their clients: http://www.cnbc.com/id/49434073