No matter when you traded markets, in the 80's up through today, the greatest marginal advantage made all the difference in being successful. In a pit standing right next to a brokers bid and offer or, for awhile anyway, next to the exchange server's broadcast bid and offer.
The great rush to quant trading operations was ultimately not that they would make so much more money, although I am sure they believed it, but rather that those allocating trading capital would hopefully view quant expertise as the only way to reduce risk exposure in a trading world made flat and edgeless by connectivity.
But the nature of risk is to be misunderstood almost universally. It is true the more time a position remains exposed requires a greater cost in covering the greater possible negative outcomes. HFT seemingly reduced that risk by speeding through all the elements and squashing the measure of time down to almost nothing. Catch me if you can if you will. But the spiraling failure of quick time to capture greater returns shows the greatest marginal advantage in HFT ultimately loses to the performances of the gma in longer time, less transactional strategies. Great returns come from strategies that cover greater event horizon risks because of the increased probability of catching significant returns from extended market moves.
