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High-Frequency Traders Use 50-Year-Old Wireless Tech
jfruh writes "In the world of high-frequency stock trading, every millisecond is money. That's why many firms are getting information and sending big orders not through modern fiber-optic networks, but using line-of-site microwave repeaters, a technology that's over 50 years old. Because electromagnetic radiation passes more quickly through air than glass, and takes a more direct route, the older technology is seeing something of a renaissance."
The traders who want to keep their jobs use line-of-SIGHT microwave transmission.
Have no clue what line-of-site is, but sounds like it doesn't transmit beyond the local building.
Assclown submitter and illiterate editor.
private account in the trading system that returns 3% PER DAY.
In other words. If she invest $1000 in her account, she will have $136.423.718 after two years of trading. Insane - or she might have been exaggerating.
($1000*1.03^400 = $136.423.718 (200 trading days per year))
You really think algorithms that feed off of and fight each other on microsecond timescales, placing and then shorting more orders for shares of companies than exist in the entire world, reduce volatility?
I know for a fact that HFT's reduce the spread between BID and ASK because numerous studies have been done showing empirically that this is the case. This means that all the people that cry that they are "siphoning money off the market" and other such crap are full of shit. You are getting better BID's and ASK's because the HFT's are in the market, therefore their percentage of the transaction is just a few for a worthwhile service.
Here is one citation and if you want the PDF, try here.
The New York Stock Exchange automated quote dissemination in 2003, and we use this change in market structure that increases AT as an exogenous instrument to measure the causal effect of AT on liquidity. For large stocks in particular, AT narrows spreads, reduces adverse selection, and reduces trade-related price discovery. The findings indicate that AT improves liquidity and enhances the informativeness of quotes.
Data and facts trumps FUD every day of the week in my book.
"His name was James Damore."
No value is destroyed other than for those who decide to sell their stocks because the prices changed with "no actual cause", and even that value isn't destroyed it's transferred to those who bought the stocks when they were priced way under their actual value.
No tin foil needed for microwave antennae. There's a reason it's called "line of sight" transmission. If you can't see your target (at least with binoculars), then the microwave transmission will be spotty at best to begin with, if it doesn't outright not work.
As for cell phone signal, which has an easier time penetrating normal structures, you still run into issues with regular old construction materials. Some insulation is aluminum-backed, I've even seen apartments with aluminum foil put up underneath the paneling, presumably to help hold heat in. Then for larger buildings, the metal frame itself or the steel rebar in concrete structures poses a huge obstacle for any EM signal.
I've worked in HFT for 7 years, at 2 companies, and I can tell you from this experience that you are wrong.
Entering and order and cancelling immediately repeatedly goes by many names, e.g. flashing, and is illegal. Companies that do it will at a minimum get fined (eliminating possibly profit from it), and can be expelled from the exchange - meaning no future profit.
ALL KINDS OF MANIPULATION ARE ILLEGAL.
Being HFT doesn't change that.
BTW I've seen the kinds of fines that the SROs can hand out (this was from a mistake, not even manipulation), and they are enough to make you blanch.
The SEC has been investigating HFT for years, learning whatever they can, and believe me, any company that can singlehandedly push the markets around is taken very seriously. A working stock market is the SEC's #1 concern.
HFT uses that same trades that people have used for years, such as arbitrage, but using technology to make it more efficient.