Early News Releases are a Smoke Screen

I’ve got news for you. Yes ‘Not As Fast’ High Frequency Trading (HFT) Firms, the slower HFT variety, are buying data 15 milliseconds or even 15 seconds earlier than the public release. But that information should be the least of your concerns. Why? If you thought while sitting in your home office, or mother’s basement or dorm room or even at one of the big trading floors, that you could compete with even the slowest of the HFT firms you are just delusional. If they get the news release AFTER you do, they can still read it and trade The S&P 500 ($ES_F, $SPY) 10,000 times before you push the buy or sell button. Did you even notice there was an early release? So what is the real story here? Deflection.

HFT firms are being made out to be monsters that are destroying the integrity of the markets. They are. But not because they trade the news earlier than you do. There are a myriad of other reasons that you can focus if you hate HFT. My friends Sal Arnuk and Joe Saluzzi at Themis Trading wrote a whole book about it Broken Markets. So I do not need to reiterate them here.

This investigation of an early news release is nothing more than the crooks sending the police to investigate someone else. Everyone is a winner in this game except you the investor. The HFT firms get the heat off their backs and can continue to print money front running my 1000 share orders by a 1/2 a penny. The Regulators can show that they are doing something, investigating, even if it is the wrong thing to investigate. And the television news can dream up all the things that can happen in 15 milliseconds to enrage us and inflame the fight against Reuters and the like. How dare they give a major news release 15 milliseconds early to anyone. That is not a level playing field! If you are now thinking like this then the HFT are winning again. No matter what the outcome of this investigation you will still be losing. Deflection. If that enrages you then go start a business baking cupcakes instead of trading. This game is rigged, and this latest round of news is proving that it will not be changed anytime soon. Learn to play in the sandbox that is there in front of you or get out.

Join the Dragonfly Capital Views Premium Membership

Want to learn more about Dragonfly Capital Views?Dragonfly Capital Views Performance Through May 2013 Expiry and sign up here.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Dragonfly Caps Blog