This "high frequency trading" isn't making liquidity. It's faking liquidity. Buy and sell orders with specific price triggers can be put up and taken down rapidly without ever being executed. Most of this type of trading does just that. The Bitcoin world calls this "fake walls".
If an order couldn't be taken down until N minutes had elapsed, orders would represent real liquidity. You could look at the market and know you really could buy or sell a large volume at some amount. What actually happens is that there are orders that run away if they're close to being executed. That's fake liquidity.
If an order couldn't be taken down until N minutes had elapsed, orders would represent real liquidity. You could look at the market and know you really could buy or sell a large volume at some amount. What actually happens is that there are orders that run away if they're close to being executed. That's fake liquidity.