The OP was referring to the person affected by the front-running, not the front-runners. "Picking up pennies in front of a steam-rollers" is from Taleb, and refers to short-term traders who buy/sell a large amount on margin (or backed by loans), and hold it for a very short period. Since the market tends to go up on more days than it goes down, on average these guys make money (before taxes and trading fees). The steam-roller is the black swan event, the large, unpredictable event that will drop the price faster than you can get out, causing you to lose more money than in the years leading up, and quite possibly bankrupting you due to margin calls or the loans. The OP is saying that the only way someone front-running you causes you problems is if you are doing many short-term trades, because otherwise the percentage you lose is too small to worry about. If the front-running loss (which is small) is a large percentage of your gain, then you must be picking up pennies, and if you are doing that, you are risking being flattened by Taleb's black swan steamrollers.

The only way someone front running causes you actual profit margin problems is if your profit margins rely on trading a large volume in a given time period, yes.

This essentially means you're profiting off an understanding of volatility. As Taleb showed, this requires care, since the standard deviation of a security cannot be reliably quantified from historical data, yes.

But there are almost always ways to trade large volumes on a prediction of volatility without running into Taleb's steamroller. The easiest first step is to never write a call option on a stock you don't already own (or short sell stocks in any other fashion). Then your losses are bounded since you can't go below zero dollars. Then you've just got to make sure you don't bust when you're left holding the busted security. This can be done with ordinary bankroll management like a poker player might use. But it's also what hedging is for. With hedging, you control the risk distribution of a given trade. All you do is simultaneously make other trades that boom in the case that the first trade busts.

I always thought that the phrase refers to doing a lot of small upside, but high probability of profit trades like selling far out of the money options for pennies. One bad trade is enough to wipe you out including hundreds of successful trades.