I don't need to justify my activity, nor do I want to go that route--my point is that the fact that participants can realistically expect a fill is not something that happens because of magic.
You make the same assumption yourself, every time you trade. The entire purpose of high frequency trading is to beat others to good deals -- not to do a better job of discovering good deals.
I'm fairly sure this is the answer: They don't -- instead, they're just good at noticing, very quickly, the actions of the market actors who do. Which is just another way of saying that they're about beating others to the deal.
(I'd also guess that they're probably also quite good at handing recreational day-trader's asses to them.)
(so speed is important to you, just as water is important to a fish; it may not be what you focus on, but that doesn't mean that it's not critical).
The question is, why can't the buy and sell orders be matched directly, allowing the buyer to pocket the discount off the price he was willing to pay, instead of the difference going to an HFT with access to the incoming order stream? What possible benefit is provided to the market by skimming off the difference like this?
The behavior I talked about above is one of the objections to HFT as it's currently practiced, and I'd like to know whether it reflects a misunderstanding.
In terms of you justifying HFT activity, of course not. There have always been advantaged participants and HFT traders are simply those today. But the article was trying to justify HFT as manna for all participants, which seems unlikely considering how much money the industry is extracting for their liquidity-providing services.
