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High-Frequency Traders Are the Ultimate Hackers, Says Mark Cuban
An anonymous reader writes "Billionaire Mark Cuban talks in an interview with the Wall Street Journal about how he thinks high-frequency trading can be quite damaging to stock markets. He goes so far as to call high-frequency traders the 'ultimate hackers.' He says, 'They're running software programs that have one goal, and that's to exploit the trading systems as early and often as possible. As someone who wrote software for eight years and who keeps up very closely with the technology world, that scared the hell out of me. The only certainty in the software world is that there is no such thing as bug-free software. When software programs are trying to outsmart other software programs and hack the world's trading platforms, that is a recipe for disaster. ... How many times an hour are there failures across individual equities around the world because of software running algorithms battling each other for supremacy to make a profitable trade? We have no idea. It's not a question of if or when we have meltdowns, it's just a question of how big and where. It's straight out of War Games. And that's before we even get to the possibility of nefarious or sovereign hackers getting involved.'"
Mark is currently trending because of the way that he handled ESPN analyst Skip Bayless last week, on live tv. He completely owned.
http://www.youtube.com/watch?v=hv2jqFd2-qI
How hard would it be to say:
Stocks/bonds/commodoties have an undodgable tax of 0.2%? This is collected out of the trade automatically and sent to DC in real time.
I'm not in a thinking mood whether this should be on sales or purchase. It would hurt high frequency traders because they'd be paying mad taxes, but people who invest like a sane man for long term the tax is negligable.
God spoke to me
"The provide liquidity"
The market had adequate liquidity before high frequency trading, I challange you to find a reasonable arguemnt that it did not. The problem is the "more = better" argument being applied without any rational thought behind it. This is like using total calorie consumption in a country as a measure of health. In a place of absolute starvation it can be a worth-while absolute measurement: more calories is better. But once you hit a certain point you have to start paying more attention to distribution of calories, and then at another point more calories is damaging to health. We have long since hit the point where having more money flowing into the finantial sections of our econmy is just damaging, and that is totally ignoreing the evident distribution problem.
And high frequency trading does hurt you with you limit order: it makes it less likely that you are going to be able to make as much money out of your trades. They can try every combination up to $100 in microseconds to test the waters (without ever commiting to a trade) and so find the person willing to pay the least to buy that. Then they can figure out who is willing to pay a bit more, and in the blik of an eye become the middle-man, pocketing the difference. They have that unfair advantage over you, just because they are bigger and have more money. How is that ever going to benifit a just or equitable society? In a fair market your broker could have found the person willing to sell to you for $99. And before you argue that the high frequency trader is just replacing the broker, that broker should have been working for your best interests, if they are keeping the difference you can alwasy find a more moral broker.