High-Frequency Traders Use 50-Year-Old Wireless Tech

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High-Frequency Traders Use 50-Year-Old Wireless Tech

Posted by Unknown on Monday December 10, 2012 @05:04PM from the get-with-the-times dept.

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."

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Great... by Mitreya · 2012-12-10 22:02 · Score: 5, Insightful

In the world of high-frequency stock trading, every millisecond is money
Always good to be reassured that the market reflects the intrinsic value of the companies instead of behaving as a high-tech casino.
1. Re:Great... by gagol · 2012-12-10 22:17 · Score: 2
  
  Do not worry, some man-in-the-middle can fix that for us now that its all in the air!
  
  --
  Tomorrow is another day...
2. Re:Great... by durrr · 2012-12-10 22:34 · Score: 5, Funny
  
  I was thinking more along the line of a foil-covered-blimp-in-the-middle attack.
3. Re:Great... by kasperd · 2012-12-10 22:39 · Score: 5, Interesting
  
  Always good to be reassured that the market reflects the intrinsic value of the companies instead of behaving as a high-tech casino.
  There is a reason why people who need numbers that are provably random, compute a hash value of stock indexes. Wall Street has build the world's most sophisticated (P)RNG.
  
  All these stories about traders needing ultralow latencies is a symptom of a fundamentally broken system. There are places where low latencies add value, stock trading is not one of them. Reduce the latency of everybody involved in the stock market, and nobody will have gained anything (except from the tech companies selling the technology being used).
  
  The system should be modified to be round based rather than real-time. 10 seconds per round is long enough that all traders can have equal access regardless of how far they are from the stock exchange, and it is short enough that it won't be a hindrance to long-term investors. A round could spend a couple of seconds executing the trades, then publish the results, add another couple of seconds for communication, and traders will still have six seconds for calculations before the deadline for the next trading round.
  
  With such a round based system you will change from competing on having the shortest distance to competing on having the best algorithms. Nobody will get an unfair advantage by having a shorter distance. Even if somebody does have one second more for calculations due to shorter distance, somebody further away can make up for that by a small increase in processing power. This is different from the latency based game, where no amount of processing power can make up for the additional latency.
  
  --
  
  Do you care about the security of your wireless mouse?
4. Re:Great... by jamesh · 2012-12-10 22:39 · Score: 2
  
  I was thinking more along the line of a foil-covered-blimp-in-the-middle attack.
  RPG-in-the-middle attack would be even cooler!
5. Re:Great... by AVee · 2012-12-10 22:51 · Score: 1, Insightful
  
  So true. High-frequency trading should be made illegal, like most things which just extract money from others without providing value in return.
6. Re:Great... by dintech · 2012-12-10 23:32 · Score: 1
  
  people who need numbers that are provably random, compute a hash value of stock indexes
  What are you saying? That the stock market is random or that you can snapshot it and use it as a random seed? The first is wrong and the second as an actual implementation seems highly contrived and improbable. What kind of people are we talking about that would do this? The market seems like a rather arbitrary choice for this too when you could use 1000s of other measurable/sampleable things from within your code. Lets not even get started on all the design decisions you need to make to ensure that your hash generates truly random seeds from the plethora of values available to you in the market.
  
  It occurs to me that there are two kinds of interested parties. Those who really, REALLY need true random sources and will probably buy appropriate hardware to do this. Then there's the rest of us for whom the wide range of pseudo-random algorithms already available is good enough without having convoluted and slow implementations like seeding from hashes of stock market values. It seems like a bit of a weird and esoteric choice when there are plenty of other good, simple and local options for random seeds. This mysterious third kind of programmer that feels inclined to do this probably needs a better grasp of both pseudo-random numbers and/or efficient implementations of random-number sources.
7. Re:Great... by dorre · 2012-12-10 23:40 · Score: 1
  
  This certainly a current and intersting subject. I wonder if someone care to enlighten me (and I suppose a lot of other people as well).
  
  I am very uncertain why this millisecond trading is so important. What in the market makes this a viable way of doing business? Appearantly most bids in the market has a lifetime of 3 ms or less and are never realized. To me this seems like a way of manipulating the market. Personally I think available bids or offers should be secret. Only realized deals should be common information. This way it would not be possible to affect the market without cost. E.g. by leaving a bid or offer just to withdraw it milliseconds later.
  Another thing I am uncertain off is how a buyer and seller is matched? When I leave an offer to buy shares for a specific price. What happens next? Anyway, I think these are important aspects to understand whether highfrequency trading provides a real value or not.
8. Re:Great... by Rogerborg · 2012-12-10 23:52 · Score: 1
  
  Casino is an interesting word, when one of the potential solutions (to these worthless parasites) is to introduce random delays to all transactions.
  
  --
  If you were blocking sigs, you wouldn't have to read this.
9. Re:Great... by u38cg · 2012-12-10 23:57 · Score: 1
  
  Umm, that's nice and all, but actually stock does not have to be sold through the stock exchange.
  
  --
  [FUCK BETA]
10. Re:Great... by locofungus · 2012-12-11 00:17 · Score: 3, Informative
  
  How?
  As a long term investor, if I want to buy, I buy at the current ask price, if I want to sell, I sell at the current bid price.
  I depend on there being people who want to offer prices. They offer those prices because they think that they can match buyers to sellers. They make their money from the difference in bid and ask prices.
  Make them slow down and they'll have to expand their bid/ask spread to allow for the fact that the market might move between them finding a seller and them being allowed to sell to a buyer.
  Sure, by having small spreads, there are then people who think they can make money from short term price fluctuations, but they're making tiny amounts and therefore having to make huge trades. That's great for me because it means there's plenty of liquidity. Make the spreads wider and they'll disappear from the market - if shares have got to go up 5% to even break even on a trade then there won't be any day trading. But I'll be losing 5% on every deal as well.
  There are abuses of the system. Most of them are already illegal but are either currently impossible to detect or there isn't an incentive to investigate them (or both). Fix that part of the system and HFT just becomes another way to invest that complements the long term investors who don't want to play a high adrenalin, high stakes game.
  Tim.
  
  --
  God said, "div D = rho, div B = 0, curl E = -@B/@t, curl H = J + @D/@t," and there was light.
11. Re:Great... by sco08y · 2012-12-11 00:19 · Score: 2
  
  Always good to be reassured that the market reflects the intrinsic value of the companies instead of behaving as a high-tech casino.
  There is a reason why people who need numbers that are provably random, compute a hash value of stock indexes. Wall Street has build the world's most sophisticated (P)RNG.
  Cite please. And if the cite says "we use the least significant digit of stock prices", I'm calling you full of shit.
12. Re:Great... by sco08y · 2012-12-11 00:21 · Score: 3, Funny
  
  So true. High-frequency trading should be made illegal, like most things which just extract money from others without providing value in return.
  I doubt the government is going to make 98% of itself illegal.
13. Re:Great... by Threni · 2012-12-11 00:33 · Score: 1
  
  > The system should be modified to be round based rather than real-time.
  Why? Leave it as it is - it's not hurting anyone. You, as a consumer, can still research companies, stock prices, forecasts etc, and decide to buy which stock you want. When you're ready, buy it. A few milliseconds won't make any difference if you're going to be holding stock for months/years. If people want to get involved in all this millisecond stuff leave them to it.
14. Re:Great... by AmiMoJo · 2012-12-11 00:43 · Score: 1
  
  In all seriousness is there anything anyone could do if you owned an apartment in between two microwave antennas and decided to wallpaper it with tin foil?
  For that if you lived between your neighbour and the mobile phone mast would there be anything to stop you wallpapering the back wall to block reception in their house? My guess is not since when T-Mobile stopped working they told me that someone's new flats were blocking the signal and I was SOL. Contract terminated, end of story.
  
  --
  const int one = 65536; (Silvermoon, Texture.cs)
  SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
15. Re:Great... by xiando · 2012-12-11 00:50 · Score: 1
  
  There is a simple solutions: Do not allow orders to be pulled before it's been on the exchange for 10 seconds. Right now ordres are placed and pulled dozens of times every millisecond. I do not consider an "order" which is pulled within a millisecond anything but noise and market manipulation.
  
  --
  9/11: Never forget it was a false-flag operation
16. Re:Great... by Guignol · 2012-12-11 01:00 · Score: 1
  
  I'm not sure you can really make a man-in-the middle attack, the summary must be mistaken cause I don't think this technology is 50 years old.
  This is "line of site" microwave technology, I suppose it allows them to communicate insanely fast from "sight to cite", that is to say, allowing them to spread information at the speed of rumor, the fastest known way to communicate in the universe. Any man in the middle attack attempt would add a noticeable lag.
17. Re:Great... by Anonymous Coward · 2012-12-11 01:13 · Score: 1
  
  How about a clutch of mylar balloons? these could be moored strategically.
18. Re:Great... by aaarrrgggh · 2012-12-11 01:43 · Score: 1
  
  So then only the HFT companies will compete in the non-exchange trades. That, or someone desperate to buy or sell at an unfavorable price.
19. Re:Great... by serviscope_minor · 2012-12-11 01:44 · Score: 1, Troll
  
  I doubt the government is going to make 98% of itself illegal.
  Ah, so you're one of the lol gubbermint is teh evul lol111!!one crowd, eh?
  So, which 98% of the government would you scrap?
  The roads?
  Education?
  The military?
  Fire service?
  Police service?
  Funding research?
  Disaster management?
  Trash collection?
  The courts?
  Helth service (if you have one)?
  Social security (if you answer yes to this, would you also increase funding to the police by 100x to deal with the inevitible fallout)?
  Environmentla protection and regulation?
  Prisons?
  etc?
  
  --
  SJW n. One who posts facts.
20. Re:Great... by stooo · 2012-12-11 01:50 · Score: 1
  
  "Interference can bring an entire network down"
  I see a huge sales potential for high power jammers :)))
  RFI rules
  
  --
  aaaaaaa
21. Re:Great... by heathen_01 · 2012-12-11 01:55 · Score: 1
  
  How?
  As a long term investor, if I want to buy, I buy at the current ask price, if I want to sell, I sell at the current bid price.
  Why?
  It sounds like you are relying on a third party to match your trades when there is a perfectly good exchange (that you're already using) that can match your trades just as well.
  Is there a problem with ignoring the HFT and placing your order at the price you want?
22. Re:Great... by Anonymous Coward · 2012-12-11 01:55 · Score: 1
  
  I must say that your aim is quite impressive if you manage to hit photons with an RPG.
23. Re:Great... by SJHillman · 2012-12-11 01:57 · Score: 4, Informative
  
  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.
24. Re:Great... by VorpalRodent · 2012-12-11 02:30 · Score: 1
  
  I am insufficiently familiar with how the electronic trading system works at the level they're utilizing it, so if someone has some direction on where I can research it more, that would be great, and maybe I'm arguing for what is substantially the same solution, but why would we need to create such a fundamental change as the institution of "rounds".
  
  Couldn't the calculation of those bits of data which rely on outstanding orders simply be done less frequently? I'm assuming it isn't truly realtime, so why not just make it every second instead? Wouldn't that achieve roughly the same result of removing the value of that latency?
  
  --
  Take it to the limit, everybody to the limit, come on, everybody fhqwhgads.
25. Re:Great... by Vasheron · 2012-12-11 02:36 · Score: 2
  
  Ok people we need donations of tinfoil for this operation! Please send us your hats!
26. Re:Great... by mestar · 2012-12-11 02:44 · Score: 1
  
  And who's going to be the one who says what has value and what does not?
  A new book on a subject where 100 books already exist. Does that book provide value? Probably not.
  Watching a basketball game? No value at all for spectators.
  So, you are proposing banning books and sports. Your comment not only provides zero value, but in fact has negative value. If you propose to make things of zero value illegal, what do you propose to do with people who provide negative value. Shoot them on site?
27. Re:Great... by kenh · 2012-12-11 02:55 · Score: 1
  
  Wireless providers do not guarantee inside phone service.
  
  --
  Ken
28. Re:Great... by Lumpy · 2012-12-11 03:10 · Score: 1
  
  Dont even need that. Model rocket with it's parachute replaced with a lot of aluminum foil that was ran through a cross cut paper shredder (put a piece of paper on each side of it) Chaff the air when the time is right and you take them offline and they dont make the trade.
  
  --
  Do not look at laser with remaining good eye.
29. Re:Great... by NSash · 2012-12-11 03:10 · Score: 3, Informative
  
  What are you saying? That the stock market is random or that you can snapshot it and use it as a random seed? The first is wrong and the second as an actual implementation seems highly contrived and improbable. What kind of people are we talking about that would do this?
  An actual place where this is used is seeding PRNGs used to select people for jury pools. They want the seed to be something verifiable by third parties after the fact, but not anything that could have been predicted in advance or manipulated to determine who will be in the pool.
30. Re:Great... by pev · 2012-12-11 03:13 · Score: 1
  
  When you say man-in-the-middle, I think you mean tower in the middle. (Previously reported a while back but will be a bit before your time for many readers!)
  Of course with old technology comes old techniques...
31. Re:Great... by afidel · 2012-12-11 03:16 · Score: 1
  
  I don't think you're going to get a model rocket into the highly secured datacenter of the NYSE, tinsel payload or not.
  
  --
  There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
32. Re:Great... by IndustrialComplex · 2012-12-11 03:36 · Score: 2
  
  Of those, how many can only be perfomed by the Federal Government? California probably shouldn't have a say in how Maine designs their roads, fire departments, or a whole host of other services.
  Trash collection is an interesting one as well. Why must that be a government function?
  1. My hometown had trash pickup as a government service. 1x/week, extra fee on your property tax bill.
  2. I then lived in a rural area in a non-incorporated area. I could hire someone to pick it up, or I could just load up my truck every 2 weeks and make a trip to the dump. So I just hauled it myself.
  3. In Virginia, I sold my truck, so I pay a company. There are 4 major companies that service the general area, if I don't like one, I can go to another. Right now I get trash pickup 2x/wk and recycling pickup 1x/wk.
  I actually liked hauling my own trash because it made me a bit more conscious about how much trash I generated. I paid by the truckload to dump it, so the more waste I could cut resulted in a direct $ savings to me.
  The point being, not everything has to be a government service, and people aren't 'evil' just because they might not want a government service provided.
  
  --
  Out of modpoints but really liked a post? 1BDkF6TtmmeZ3yqXbz9yhdYVqRYnwFoXDj
33. Re:Great... by egcagrac0 · 2012-12-11 03:43 · Score: 3, Funny
  
  But aside from that, what have the Romans done for us?
34. Re:Great... by TheCarp · 2012-12-11 03:48 · Score: 1
  
  Actually, I believe this is a "mostiure barrier". It is somewhat to keep heat in, its more to keep moist air (think, your breath), from drifting into unfinished spaces where temperature differences can cause it to condense and provide an environment for mold.
  I have heard of particularly bad situations where insulation in a colder area with significant moist air can actually collect enough water to cause water stains and drips.
  
  --
  "I opened my eyes, and everything went dark again"
35. Re:Great... by khallow · 2012-12-11 03:57 · Score: 4, Insightful
  
  All these stories about traders needing ultralow latencies is a symptom of a fundamentally broken system.
  So what's broken? Before we start fixing things, shouldn't we have a problem first?
  
  The system should be modified to be round based rather than real-time.
  
  Real-time looks better to me.
  
  10 seconds per round is long enough
  That's a bit too long for a round. How about 10 nanoseconds instead? I might be a bit facetious here, but I see no reason to help out slower traders. The market exists to trade things, not to play favorites. Those low latency traders have to work hard to gain their modest market advantage. And that is as it should be.
  
  In addition to the usual market benefits (such as lightning fast arbitrage and hedging, greater liquidity, etc), we also have a great arms race going on. This whole story is about a concrete spin off of HFT -- better microwave communication.
36. Re:Great... by cusco · 2012-12-11 04:07 · Score: 2
  
  Mostly it's because warm humid air will condense when it hits cold fiberglass or cellulose insulation, and wet insulation is useless. Actually worse than useless, since it makes a decent mold habitat.
  
  --
  "Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
37. Re:Great... by heathen_01 · 2012-12-11 05:04 · Score: 1
  
  any latency of the change in price of his order translates in a higher risk, risk can be translated into money and thus lower latency yields better prices in the book.
  How is this going to affect the long term investor?
38. Re:Great... by Americano · 2012-12-11 05:32 · Score: 1
  
  I am very uncertain why this millisecond trading is so important. What in the market makes this a viable way of doing business?
  Arbitrage is what makes it viable. HFTs typically make fractions of a penny on any given trade, and make large profits by making LOTS of trades. This benefits the overall market by increasing the liquidity available. I want to sell a share stock, and decide that I want to sell it at $21.05. I place a sell order for that; An HFT algorithm calculates that shares of that stock will rise in price, so it makes the purchase. I sell my stock at a price I wanted to sell it at, the HFT now has a share of stock to resell. Somebody else comes along, having heard great things about the stock, and says, "Wow, I want in on this company - I'll pay $21.08 for a share of that stock!" The HFT is then able to make a sale, and pocket a cool 3 cents profit. Both the buyer and the seller benefitted by having the increased liquidity of being able to sell when they wanted, and the HFT benefits by making a small profit off the arbitrage.
  
  Personally I think available bids or offers should be secret.
  How do you reach a deal then? "Psst. HEY! I have some shares of Google for sale." "Cool, how much do you want?" "Just give me your credit card number, your card company will let you know how much it cost." Anybody agreeing to sign a contract on those terms would be a fool.
39. Re:Great... by FridgeFreezer · 2012-12-11 05:34 · Score: 2
  
  How about learning from history: http://en.wikipedia.org/wiki/Chaff_(radar_countermeasure)
  
  --
  There is no music - home taping killed it.
40. Re:Great... by willy_me · 2012-12-11 05:35 · Score: 1
  
  If the house has a aluminium foil wrapping, it is either a house built before plastic was available or the foil was being used as more then just a vapour barrier. Probably an attempt to reflect radiant heat.
  But you are absolutely right about the need of a vapour barrier. Most contractors don't understand just how important it is. With modern construction materials (windows, insulation) the overall effectiveness of the insulation has increased significantly over the years. But better insulation just increases the need for a proper vapour barrier. Every little mistake results in condensation within the insulation which leads to water damage and a larger heating bill. I had to tear apart the ceiling of my parents new house because the idiot contractor didn't know what they were doing. The ceiling was dripping water and house was always so cold - and it wasn't from a leak.
  But back on topic, another common problem with radio signals and construction materials is the coating they put on hardwood floors. Some type of aluminium based compound? Can't remember exactly but it was mentioned on slashdot a couple years ago so it must be true.
41. Re:Great... by kasperd · 2012-12-11 06:02 · Score: 1
  
  Couldn't the calculation of those bits of data which rely on outstanding orders simply be done less frequently? I'm assuming it isn't truly realtime, so why not just make it every second instead? Wouldn't that achieve roughly the same result of removing the value of that latency?
  The problem to be solved is this one. Trader A places, modifies, or cancels a bid. Trader B and trader C see the information about A's bid being published. In response to that change, both B and C want to place, modify, or cancel a bid of their own. But whether the change made by B or the change made by C gets to the exchange first can affect the trades happening.
  
  This means whoever can get information about changes in bids and in response to that modify their own bids with the lowest latency has an advantage. I cannot see how that can be solved without introducing rounds.
  
  In the above example it could be that B and C both want to trade with A and whoever gets there first gets to trade with A. But the updates that B and C want to make don't have to be about trades with A. It may just as well be that B and C could trade with each other or with a fourth party.
  
  --
  
  Do you care about the security of your wireless mouse?
42. Re:Great... by kasperd · 2012-12-11 06:32 · Score: 2
  
  How about 10 nanoseconds instead?
  Nope, won't work. Laws of physics must be observed. Take your 10ns proposal and subtract the communication latency to find out how much time is left for computations. Turns out that the communication latency alone is going to be 3-8 orders of magnitude higher.
  
  What you need to do to make the model workable is to consider the best case and worst case latency for the traders and use that to compute the best and worst case time available for computation. And it is the time available for computation, which must not differ by too many percents. Realistic numbers would be communication latencies between 100usec and 300msec. The best case latency is actually negligible, assuming it is zero will not affect the outcome of the calculations much.
  
  Assuming 500msec per round with the above numbers the time left for computation would vary between 200msec and 500msec. That's 150% more time for the best case than the worst case, meaning traders with worst case latency must acquire hardware which is 150% faster to remain competitive. Increase the round duration to 2sec and the numbers now become 1700msec and 2000msec, only 18% difference.
  
  --
  
  Do you care about the security of your wireless mouse?
43. Re:Great... by tolkienfan · 2012-12-11 06:39 · Score: 1
  
  Given that in highly traded stocks there is a 1c spread, meaning if you simultaneously enter a sell and a buy market order you will lose exactly 1c per share (other than exchange fees and broker fees), how far can the stock be from its "intrinsic" value? Answer: on average 0.5c
  What you don't understand is how price discovery occurs. The invisible hand has always existed. HFT makes it work its magic quicker.
  People who try to price anything discover that they are constricted - certain prices actually work better than others. They don't necessarily know why.
44. Re:Great... by Skillet5151 · 2012-12-11 06:50 · Score: 3, Funny
  
  I would be a lot more impressed if you didn't hit any.
45. Re:Great... by Lumpy · 2012-12-11 07:16 · Score: 1
  
  You did not go to school very much did you.
  Microwaves go through the air, they point from building to building with no "highly secured datacenter of the NYSE" tunnel between them. Pigeons can fly there. Therefore a model rocket can easily do what I want it to and take out that link for a short time.
  I strongly suggest you go and get some basic education, because you seem to lack a lot of it.
  
  --
  Do not look at laser with remaining good eye.
46. Re:Great... by davester666 · 2012-12-11 07:47 · Score: 1
  
  It gives me that warm feeling inside...
  
  --
  Sleep your way to a whiter smile...date a dentist!
47. Re:Great... by Bill_the_Engineer · 2012-12-11 07:52 · Score: 2
  
  I might be a bit facetious here, but I see no reason to help out slower traders. The market exists to trade things, not to play favorites. Those low latency traders have to work hard to gain their modest market advantage. And that is as it should be.
  Except your statement is self contradictory. What you propose favors those with the lowest latencies while kasperd's proposition actually levels the playing field. The more participants the better the trade, otherwise the market devolves into an exchange between powerhouses that can manipulate the market derived value of the goods.
  
  --
  These comments are my own and do not necessarily reflect the views or opinions of my employer or colleagues...
48. Re:Great... by viperidaenz · 2012-12-11 08:08 · Score: 1
  
  Some cellphone signals operate at microwave frequencies. WiFi operates at microwave frequencies. Microwave = > 1GHz. 2.1GHz is a common cellphone network frequency.
49. Re:Great... by viperidaenz · 2012-12-11 08:12 · Score: 1
  
  Adding lag in this scenario is a pretty good attack. If trader A says "buy X now!" and you capture that, delay the signal and before it gets through, you buy it first, you'll get it at a lower price. Same for selling. You could piggy back on some other trader and profit more than they do.
50. Re:Great... by sedmonds · 2012-12-11 08:22 · Score: 2
  
  HFT arbitrage largely exists because of the ability to make bids/offers with no intention of completing the transaction. It's arbitrage -only- because they have the ability to act in bad faith in contracting for a sale. Cancelling bids/offers should be permitted only where there is a bona fide reason which would be valid in other contractual context - like typographical errors and honest mistake where enforcing would be manifestly unjust.
51. Re:Great... by jamesh · 2012-12-11 08:48 · Score: 2
  
  I must say that your aim is quite impressive if you manage to hit photons with an RPG.
  You misunderstand. MITM isn't about knocking "photons" out of the way, it's about injecting my own payload into the data stream and causing a communications crash. I've not tested it, but I think the receiving dish will be unable to differentiate between my packet and a regular wireless packet and will be forced to "accept" my packet causing major disruption to the communications stream. I'm fairly confident that my packet won't even need to know the encryption key used on the wireless connection.
52. Re:Great... by rnturn · 2012-12-11 08:49 · Score: 2
  
  "...quite impressive if you manage to hit photons with an RPG."
  
  Who'd need the accuracy to hit photons when the transmitter or receiver is an easier target? Plus, taking out the data link hardware would be too obvious and easy to fix. A highly focused microwave beam that disrupts the link at seemingly random intervals would be more fun.
  
  --
  CUR ALLOC 20195.....5804M
53. Re:Great... by Actually,+I+do+RTFA · 2012-12-11 08:58 · Score: 2
  
  Those low latency traders have to work hard to gain their modest market advantage. And that is as it should be.
  Who cares if they worked hard? Life isn't first grade and you don't get an "A" for effort.
  Perverse incentives are bad. HFT adds no value. Therefore things that incentivize removal of latency (short-term goals) at the expense of say, detecting and shorting the next Enron or pumping dollars into a promising startup or trading your less risk-loving dollars for a VC's so he can invest in the next startup actively hurt society.
  
  --
  Your ad here. Ask me how!
54. Re:Great... by khallow · 2012-12-11 09:36 · Score: 1
  
  Take your 10ns proposal and subtract the communication latency to find out how much time is left for computations. Turns out that the communication latency alone is going to be 3-8 orders of magnitude higher.
  
  No reason traders can't be on the same chip as a piece of the market.
  
  Assuming 500msec per round with the above numbers the time left for computation would vary between 200msec and 500msec. That's 150% more time for the best case than the worst case, meaning traders with worst case latency must acquire hardware which is 150% faster to remain competitive. Increase the round duration to 2sec and the numbers now become 1700msec and 2000msec, only 18% difference.
  And at 10 nanoseconds, that would be roughly a factor of 3,000 difference which more accurately reflects the actual difference in computational speed between the different traders.
55. Re:Great... by khallow · 2012-12-11 09:44 · Score: 1
  
  What you propose favors those with the lowest latencies
  How? Lower latency is an inherent trade advantage just like knowledge is. Reality favors those with lower latency. "Leveling the playing field" is inherently playing favorites. The playing field isn't level and the traders which are getting an advantage off of that, didn't do anything to deserve an advantage. As I see it, breaking the market to give someone an advantage just doesn't make sense.
  
  The more participants the better the trade, otherwise the market devolves into an exchange between powerhouses that can manipulate the market derived value of the goods.
  Yet two more reasons not to break the market. HFT is in addition to other traders so it is an increase in the number of traders (and of course, trades). Similarly, market manipulation is a lot chancier in a realm where someone can respond to your manipulation attempt (and profit thereby) in microseconds rather than much longer periods of time.
56. Re:Great... by khallow · 2012-12-11 09:51 · Score: 1
  
  HFT arbitrage largely exists because of the ability to make bids/offers with no intention of completing the transaction.
  That is not arbitrage for two reasons. First, because it's not risk free. No intention of making a trade is not the same as not making a trade. There is the possibility of making a trade at an adverse price. Another HFT trader can attempt to snipe the order while it's still out there.
  
  Second, there isn't an actual trade intended (arbitrage is risk free trading). This is an attempt to distort pricing data to fool computer trading (mostly at slower time scales).
57. Re:Great... by khallow · 2012-12-11 10:06 · Score: 1
  
  Who cares if they worked hard? Life isn't first grade and you don't get an "A" for effort.
  Same goes for the whiny babes who want this changed.
  
  Perverse incentives are bad. HFT adds no value.
  What "perverse incentive"? Just because some are doing the Red Queen thing doesn't mean that it's the only possible game in the stock market. Trading faster is just another advantage and it is logical to take that to the extreme, such as is done with HFT. Nothing perverse about it.
  
  Therefore things that incentivize removal of latency (short-term goals) at the expense of say, detecting and shorting the next Enron or pumping dollars into a promising startup or trading your less risk-loving dollars for a VC's so he can invest in the next startup actively hurt society.
  What would do that? Slashdot has been talking about HFT for a number of years now. I don't recall anyone speaking of a HFT gimmick that would make this sort of stock fraud any easier. The problem is simply that HFT is so far removed from human-scale trading, that there is almost no interaction.
  
  Most ills of the stock market have nothing to do with trade speed (other than they need to get the victim to trade quickly enough, that second thoughts don't get in the way or the scheme doesn't fall apart before the victim invests). I see a lot of people who think that getting rid of HFT somehow fixes these problems, at least partially. It just doesn't work that way.
58. Re:Great... by khallow · 2012-12-11 10:13 · Score: 1
  
  This means whoever can get information about changes in bids and in response to that modify their own bids with the lowest latency has an advantage. I cannot see how that can be solved without introducing rounds.
  It's already solved in the current market by letting the above just happen. In other words, doing nothing about it works just fine.
59. Re:Great... by Actually,+I+do+RTFA · 2012-12-11 10:47 · Score: 1
  
  You completly misunderstand.
  
  What "perverse incentive"? .. Trading faster is just another advantage and it is logical to take that to the extreme, such as is done with HFT. Nothing perverse about it.
  There is an incentive to trade faster. This incentive does not align with the stated goals of the marketplace (to discover the market value of something and trade goods at that value.) "Perverse incentive" is a technical term for when an organization or individual provides an incentive that does not incentivize what they think it does/what furthers their goals.
  You also misunderstand the point I made, thinking it somehow relates to fraud. Theoretically, the market is set up (and the SEC ensures it does) so that using publicly available information in ways to predict the financial health of companies is rewarded. However, HFT introduces a deadweight loss on the system, reducing the incentives for the person/company to seek out opportunities in the stock market.
  The total reward for shorting Enron remains the same- the HFTs made money- therefore it must have come at the expense of the other party to make money: the one who shorted Enron.
  
  --
  Your ad here. Ask me how!
60. Re:Great... by djl4570 · 2012-12-11 10:55 · Score: 1
  
  It's an RPG. His character is Anti-Photon.
61. Re:Great... by serviscope_minor · 2012-12-11 12:16 · Score: 1
  
  Of those, how many can only be perfomed by the Federal Government?
  I wasn't aware we were distinguishing.
  But...California probably shouldn't have a say in how Maine designs their roads, fire departments
  Well it used to be the case in the UK too. Then WWII happened and there were a lot of fires. It turned out that having central standardisation on things such as the hose fittings etc would have been extremely useful, so engines from one region could work in another.
  Why must that be a government function?
  Well, it has to be government forced. If you live in a moderately densely populated town or city, it's not feasible to have people simply opting out, or failing to pay and losing the service. So at that point it's a government run (usually via a private subcontractor for some reason) service.
  The point being, not everything has to be a government service,
  Sure. But if you got rid of 98% of the government like the OP suggested you'd lose a lot of things that really need to be government services.
  and people aren't 'evil' just because they might not want a government service provided.
  I never claimed that, but I will claim most of them are being dumb.
  
  --
  SJW n. One who posts facts.
62. Re:Great... by Trogre · 2012-12-11 12:22 · Score: 1
  
  ... play a high adrenalin, high stakes game
  Apt choice of words there.
  
  --
  "Nine times out of ten, starting a fire is not the best way to solve the problem." - my wife
63. Re:Great... by khallow · 2012-12-11 16:28 · Score: 1
  
  This incentive does not align with the stated goals of the marketplace (to discover the market value of something and trade goods at that value.)
  
  Sure it does. I mentioned faster arbitrage and greater liquidity a few posts back.
  
  You also misunderstand the point I made, thinking it somehow relates to fraud. Theoretically, the market is set up (and the SEC ensures it does) so that using publicly available information in ways to predict the financial health of companies is rewarded. However, HFT introduces a deadweight loss on the system, reducing the incentives for the person/company to seek out opportunities in the stock market.
  I don't buy your opinion. What is the mechanism?
  
  The total reward for shorting Enron remains the same- the HFTs made money- therefore it must have come at the expense of the other party to make money: the one who shorted Enron.
  The third party is the group of people who react to news. With HFT, they would receive a smaller cut (because the HFT players move first). The fourth party are the market makers and day traders. They receive a smaller cut because there's someone a bit faster than they are.
  
  There's no loss to the shorters who trade on relatively long frames and don't use automated stop loss orders or market orders (both which are HFT-scale trades!) to cover their positions.
64. Re:Great... by chrismcb · 2012-12-11 18:52 · Score: 1
  
  It does reflect the value of the company. Fairly accurately. The value of something is what people are willing to pay for it, not what you think it is worth. If I have a $100 bill, and I've got people willing to pay me $150 for it, guess what? That bill is worth $150. It doesn't really matter what the company assets are, or how much money it makes or can makes. Its value is what people are willing to pay for it.
65. Re:Great... by dbIII · 2012-12-11 23:21 · Score: 1
  
  A lot of HFT is a man in the middle attack in the first place.
  It's about an automated leech asking Alice and Bob what they want to buy and sell for in far less time than they can work it out between themselves and pocketing the difference when it tricks Alice into selling low and Bob into selling high. People try to justify this action by pretending inflation and taking a cut means the same thing as liquidity.
66. Re:Great... by khallow · 2012-12-11 23:52 · Score: 1
  
  Leveling the playing field is by definition not playing favorites.
  
  Well, we see the definition doesn't match the reality. From now on, I suggest "interfere" in place of "level the playing field" to more accurately represent what you are proposing.
  
  The rest of your writings, while technically correct as separate statements, all depend on the above statement of yours being correct, which it isn't.
  Semantics games doesn't make my statement false.
67. Re:Great... by Bill_the_Engineer · 2012-12-12 07:58 · Score: 1
  
  Yet two more reasons not to break the market. HFT is in addition to other traders so it is an increase in the number of traders (and of course, trades). Similarly, market manipulation is a lot chancier in a realm where someone can respond to your manipulation attempt (and profit thereby) in microseconds rather than much longer periods of time.
  Here's the rub. I do not believe the HFT is necessarily a good thing or should even be allowed to exist. Call me old fashion...
  
  --
  These comments are my own and do not necessarily reflect the views or opinions of my employer or colleagues...
68. Re:Great... by sco08y · 2012-12-12 12:37 · Score: 1
  
  First, the military, the police and the courts literally provide no value. (And don't tell me, "I bet you wouldn't say that to a soldier" because I am a veteran.) What they do is prevent destructive behavior through greater destruction. It's necessary for a free society to exist, but you and I aren't better off because someone else is wasting away in jail, we'd be better off if they had never committed the crime. Wars do *not* generate wealth, that's the Broken Window Fallacy.
  
  So, which 98% of the government would you scrap?
  Ah, the faux-Libertarian argument.
  66% of the spending (Table 11.1) is not roads military and police, it is transferring wealth, literally writing checks to individuals. People think that politicians are bought, but really, politicians have been buying voters over the years.
  Now while that has grown (as a % of GDP) from 2% to 66% over the years, and look at table 15.1 from the same. Government receipts have stayed steady as a % of GDP; even when the nation was united in WWII we were not able to significantly increase receipts to cover our spending.
  The reality is that we have a crisis of spending too much. Our interest payments are continuing to increase, and if we fully lose our AAA rating, our government will stop providing all the services you value so much. We will spend all our money on interest payments, instead.
  So if you believe in an active government that will continue to provide services, you should support efforts to balance the budget by cutting these programs.
69. Re:Great... by u38cg · 2012-12-14 01:33 · Score: 1
  
  And everyone who needs the volume and availability. But thanks for trying.
  
  --
  [FUCK BETA]
70. Re:Great... by IndustrialComplex · 2012-12-14 05:00 · Score: 1
  
  Well it used to be the case in the UK too. Then WWII happened and there were a lot of fires. It turned out that having central standardisation on things such as the hose fittings etc would have been extremely useful, so engines from one region could work in another.
  However, you are vastly underestimating the difference in size between the US and the UK.
  The climate, social, structural, and geographic differences between Maine an California are so vast that even if we ignore the fact that you aren't likely to see a firetruck from Maine used in California, if you DID try to make interchangeable parts you could actually make things worse. Consider something as simple as the brake lines. Moisture in the lines is bad in California, but in Maine it would be disasterous as the freezing temperatures would cause brake failures, a very bad situation for an emergency response vehicle.
  Well, it has to be government forced. If you live in a moderately densely populated town or city, it's not feasible to have people simply opting out, or failing to pay and losing the service. So at that point it's a government run (usually via a private subcontractor for some reason) service.
  
  Not federal government though. And in the case for a lot of towns where I lived, all that was necessary was a simple law banning the storage of trash on your local property. The result was that the residents could either elect a government service, or simply do it on their own by hiring private contractors.
  I think it's a stretch to call it a government service. As I stated earlier, there is no requirement for you to even hire a service if you choose to do the work yourself. Most don't, but it's an option. And trash isn't piling up in the streets in these locations either.
  I never claimed that, but I will claim most of them are being dumb.
  I think you are taking the original concept of a desire to reduce government services and taking it to much to great of an extreme.
  
  --
  Out of modpoints but really liked a post? 1BDkF6TtmmeZ3yqXbz9yhdYVqRYnwFoXDj
71. Re:Great... by badkarmadayaccount · 2012-12-15 22:38 · Score: 1
  
  Education? Your own private schools have been proven more financially efficient. Millitary? Well they could stand a (10x) budget cut. Fire service? Run by insurance companies as co-op. Police? Security firms come running faster when your home alarm goes off than police. Cut down the force so they can conveyor civil arrests to the courts. Make reasonable self-defense law and weapon regulations. Trash collection? Let the HOA/equivallent handle it with a contractor. Health service? The current insurance scheme is technically nice, only the insurance companies are noncompetitive/under-regulated. Social security? Mostly see above, with a backup plan from gov for heavy cases - proper labor regulation (in quality, not quantity) would ease the load, at the cost of corporate margins (boo-fucking-hoo!). Prisons? Need heavy reform - social reintegration, not (only) punishment. Keep them public. The rest? Keep it government.
  
  --
  I know tobacco is bad for you, so I smoke weed with crack.
line of SIGHT by Anonymous Coward · 2012-12-10 22:05 · Score: 5, Informative

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.
1. Re:line of SIGHT by DamageLabs · 2012-12-10 22:38 · Score: 1
  
  It's a new Webster word. A portmanteau of line-of-sight and on-site.
  Last one out please turn of the lights.
2. Re:line of SIGHT by Anonymous Coward · 2012-12-10 23:34 · Score: 1
  
  Line-of-sight means that the microwave-relay towers are aligned perfectly so that the transmitting dish lines up with the receiving dish for every pair of towers. These may be on roof-tops, hills or mountain peaks. Not a good idea for people to walk in front of them.
  The most iconic example is the BT tower in London
  http://www.mds975.co.uk/masts/bt_tower.html
  The LEGO model one has more detail:
  http://images.wikia.com/lego/images/a/af/Lego_BT_Tower.jpg
3. Re:line of SIGHT by Anonymous Coward · 2012-12-10 23:56 · Score: 1
  
  Spell chequers air response bell four this plaque sway ping thee internets. Sum won clicks "autocorrect", thanks "good enough", and bam, a nether mall fumed post is hang gin gout four awl there whirled two sea. Language billed civil eyes station folks, why do you Haiti civil eyes station?
  Fixed that for you.
4. Re:line of SIGHT by Lorens · 2012-12-11 00:07 · Score: 1
  
  Hmmm. Webster DOES have it, defined as "a straight line from the muzzle of an artillery piece to a target". Definitely "citation needed". Dictionary.com says origin 1905-1910. I have taken an instant dislike to the expression, based on perceived lack of usefulness, homophony with almost-synonym, and IMHO probable origin in the misspelling of said synonym. Webster tells me to "like" it on Facebook; if there was a Facebook "dislike" I'd even consider signing up for a Facebook account.
5. Re:line of SIGHT by Neil+Boekend · 2012-12-11 00:20 · Score: 1
  
  In this case it seems to mean that you should shoot the receiving antenna's.
  
  --
  Well, I might have a way, but it only works on a semi spherical planet in a vacuum.
6. Re:line of SIGHT by vlm · 2012-12-11 02:15 · Score: 1
  
  Have no clue what line-of-site is
  I started in the telecom biz in the waning twilight years of microwave relay stations, and frankly "line-of-site" is pretty accurate, at least in that era. You look on the map and there's a line of digital microwave relay tower sites.
  I'm sure in the boom years Manhattan island was criss-crossed by a spaghetti bowl of reflector paths, but in the end years of the tech it was mostly semi-dedicated runs in basically straight lines across rural countryside, from ridgetop to ridgetop, to connect the middle of nowhere with what we call civilization. The tech was a good match for the job, in that remote sites didn't need much bandwidth (how big of a call center can a lumbermill and some hunting cabins require?) so 3 T3 is plenty, and rural workers (lumberjacks etc) could mostly understand "Stay 100 feet away from the microwave tower or your nuts will fry off" (actually we only used a couple watts, so, uh, no, but scaring them worked pretty well at keeping them away) but they could never understand when they were ripping down trees and yanking out stumps to leave our fiber alone.
  The biggest problem was salespeople always lie, its their job of course, so engineering got endless complaints from "fiber" customers who noticed their "fiber" lines were impaired whenever it was foggy or intense t-storms. The funniest was when they found out and demand we bury fiber for them. For free, of course. Oh and can we have it done by the end of the day, so I can tell my boss its permanently fixed. Um yeah someone from sales will get back to you on that.
  
  --
  "Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
7. Re:line of SIGHT by Anubis+IV · 2012-12-11 03:58 · Score: 1
  
  Darn right! And hammers are responsible for so many of societies ills as well. Someone bangs on a nail a few times, thinks "good enough", and bam, another bent nail is hanging out of a 2"x4" for all the world to see.
  As ever, clearly we are not to blame for the things that go wrong. Our tools are to blame.
  (in case it's not already evident, sarcasm is rampant in this comment)
8. Re:line of SIGHT by pyrr · 2012-12-12 04:27 · Score: 1
  
  While I must wholeheartedly agree with your sentiment, the irony of referring to people who mix-up vaguely similar words as "illiterate loosers" is just too much to refrain from remarking on.
9. Re:line of SIGHT by pyrr · 2012-12-12 04:43 · Score: 1
  
  This homonym-misspelling was driving me crazy, too. It's only reason I cared to read the comments, in fact. It seems to be a really common error in the telecom industry, so common it's possibly becoming the next "I could care less", which also drives me crazy.
  Whether it's morons endlessly repeating "socialism" when they are referring to "welfare state" policies, misused expressions, misused words, or fabricated definitions for existing terms, I've been feeling a lot like Inigo Montoya recently. It's almost like I'm speaking a different language.
The worst sort of technological development by Anonymous Coward · 2012-12-10 22:10 · Score: 5, Insightful

When you have hundreds if not thousands of highly educated minds bent on squeezing out the very last drop of speed to facilitate an activity which is right up there with spamming in terms of societal benefit, well it strikes me as a tremendous and tragic waste. And yet this is what pays the bills. So: score it one point for capitalism. Yay.
1. Re:The worst sort of technological development by Mitreya · 2012-12-10 22:47 · Score: 3, Insightful
  
  When you have hundreds if not thousands of highly educated minds bent on squeezing out the very last drop of speed to facilitate an activity which is right up there with spamming in terms of societal benefit, well it strikes me as a tremendous and tragic waste.
  
  It is only sad that people are working to squeeze more speed from the transmission speed
  The truly tragic part is that people get an edge by buying server rooms closer to the stock market to win a few picoseconds
  That's like paying $100 bucks to the dealer to be able to see other guy's hand in a poker game.
2. Re:The worst sort of technological development by The+Master+Control+P · 2012-12-11 00:02 · Score: 1
  
  It truly pains me to see so many people who should've been my colleages some day, contributing to society's knowledge of the world, doing this instead.
  
  What. A. Tragic. Waste.
3. Re:The worst sort of technological development by jtownatpunk.net · 2012-12-11 00:16 · Score: 1
  
  Actually, it's nothing like that. Not even remotely. The dealer does not have that information so it would do no good to give them $100.
4. Re:The worst sort of technological development by mwvdlee · 2012-12-11 00:40 · Score: 1
  
  And yet this is what pays the bills.
  That's kind of the problem; it DOESN'T pay bills. Or atleast, it doesn't pay any additional bills.
  HFT does not add any value to the market, therefore they do not increase the amount of bills that can be paid as a whole.
  They extract money from a system at the cost of other parties involved; the traded companies, long term investors, pension funds, etc.
  
  --
  Slashdot social media options: AIM, ICQ, Yahoo, Jabber and Mobile Text. Why no MySpace?
5. Re:The worst sort of technological development by serviscope_minor · 2012-12-11 01:49 · Score: 1
  
  So what would be your solution, to have the government regulate how often people can trade?
  Why not? Or introduce a per-trade tax? Or require that exchanges batch transactions up into 10 second increments and play thme back in a random order. Lots of options really. The government already regulates almost all financial transactions.
  Or would you just prefer that the government owns all assets
  Ah score one for the nutball. I like the options you present "un regulated wild west free for all" or "take communism to its illogical conclusion".
  
  --
  SJW n. One who posts facts.
6. Re:The worst sort of technological development by darjen · 2012-12-11 01:59 · Score: 1
  
  Even when you account for these spammers, capitalism still has less overhead and more societal benefit than socialism.
7. Re:The worst sort of technological development by vlm · 2012-12-11 02:29 · Score: 1
  
  So what would be your solution
  Let it run its course and burn itself out. It'll be replaced. Between SOX costs and other related costs, and HFT, both the corps and the retail investors are not using capital markets as much as they used to. This is not theoretical, look at NYSE volume over the years. Zerohedge has a freakout about it every time yet another record low volume is set.
  Now its important to realize in the "short" term we're nearing a market peak to be followed by a pretty big decline. Markets melting up where prices go high and volume collapses are a typical symptom of this part of the cycle. So you need to factor that out. I'm talking about trends longer than one business cycle.
  Evidence shows individual retail investors are pretty much done with the market, the corps are fed up with the regulation costs. Both the buyers and sellers are abandoning ship... The big long term picture over the next decade or two is probably growth in private equity and what were known as "junk bonds" 30 years ago. Junk bonds are actually a pretty good idea, although I'm sure some goofball can figure out a way to expensively regulate them and HFT them.
  
  --
  "Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
8. Re:The worst sort of technological development by egcagrac0 · 2012-12-11 03:49 · Score: 1
  
  Right.
  You need to bribe the table, not the dealer. The table can see everything, but is frustratingly tight-lipped.
9. Re:The worst sort of technological development by rufty_tufty · 2012-12-11 05:18 · Score: 1
  
  HFT does add value. It adds liquidity. If you do not understand why liquidity is a good thing thing:
  Imagine a market with near zero liquidity. Shares are only traded when a buyer is matched to a seller. Let's suppose I need to sell some shares (to pay for a new roof on my house perhaps) and I go to the market and no-one is interested in buying any shares in business X that I am selling. It turns out no-one is interested because they either know nothing about that company or the people who happened to turn up that day were not interested in a boring oil business but wanted to invest their cash in one of these sexy new internet startup things they had heard of. Potentially I am screwed, unless someone buys them on a whim.
  In steps banker Bob who realises I'm about to sell these shares way below what they're worth and so snaps them up at a bargain price.
  Is banker Bob evil for snapping them up cheap? [If you think he is then recall that had he not stepped in I would potentially have not been able to sell them at all and would have to remain living in a house with a leaky roof because no-one would buy my shares.]
  Am I stupid for having my nest egg in the random fluctuations of the stock market?
  If banker Bob in this situation is not evil, and if the stock market is at least in principle intended to be a place for risk aware investors then I don't see anything wrong with the above scenario. I'm going to assume you agree with me here and continue.
  What would make the situation above even better is if there were more people like banker Bob around who would bid amongst themselves to determine a fair price for the shares I am selling, so I would get a fair price. The same argument replies in reverse for if you want to buy shares for a company you want to invest in, added liquidity means more availability of shares for you to buy. It also stops you over paying for shares due to a short term availability problem.
  Remember at it's heart HFT is doing nothing illegal or immoral. A HFT is equivalent to the spotty young upstart on the trading floor who is able to hear the orders better, think faster and jump higher to catch the other person's attention in the pit trading. I'm sure the old veterans also on the floor resent his speed eyesight and hearing but that doesn't make it wrong.
  
  --
  "The weirdest thing about a mind, is that every answer that you find, is the basis of a brand new cliche" -
10. Re:The worst sort of technological development by Americano · 2012-12-11 05:44 · Score: 1
  
  No, they extract money from a system that would otherwise be lost to inefficiency in the market. HFT is the equivalent of the regenerative braking systems in a Prius - you can extract something useful with the energy released during the brakes' operation, or you can just let that energy be converted to waste heat (or noise) via friction braking.
  Either way, the car needs brakes - the only question is, do you extract something useful from the process, or let the energy dissipate as waste heat?
11. Re:The worst sort of technological development by jimbolauski · 2012-12-11 06:53 · Score: 1
  
  Or would you just prefer that the government owns all assets
  Ah score one for the nutball. I like the options you present "un regulated wild west free for all" or "take communism to its illogical conclusion".
  You even quoted my other option where the government would decide how often you can trade, and you decided that 10 second increments would fix everything. I never presented unregulated trading just not regulating high frequency trading. The path down communism lane will inevitably end with the government controlling everything to make it fair, there is no way to ensure a "level playing field" without a controlling body to decide what is fair.
  
  --
  Knowledge = Power
  P= W/t
  t=Money
  Money = Work/Knowledge so the less you know the more you make
12. Re:The worst sort of technological development by lgw · 2012-12-11 08:08 · Score: 1
  
  Why is it a waste? First, both small bid-ask spreads and arbitrage benefit ordinary traders like me. I get a beter price every time I trade because of this - a trivial amount better, usually, but better.
  Alo, just like the space program, even if you don't value what they are doing you have to see the value of the technology they invent along the way. There's lots of great engineering going on that will benefit realtime control systems and really anyplace else that needs to minimize peak latency to work better. Eventually this will make the firmware for my anti-lock brakes better.
  
  --
  Socialism: a lie told by totalitarians and believed by fools.
13. Re:The worst sort of technological development by tolkienfan · 2012-12-11 09:14 · Score: 1
  
  France is considering some of these measures.
  If they actually implement some of them liquidity will dry up and traders will move to other markets. Trading will become more expensive, which will make investing more expensive. At least in French companies. France will suffer as a whole. With the global economy no one is forced to trade French stocks.
  I hope France tries it before the US. It will be a perfect example of unintended consequences.
14. Re:The worst sort of technological development by tolkienfan · 2012-12-11 09:18 · Score: 1
  
  What industry pays additional bills?
  Printing money, I guess.
  You realize that companies that sell services or products don't CREATE the money they pay their employees? It comes from somewhere.
15. Re:The worst sort of technological development by mcgrew · 2012-12-11 09:40 · Score: 1
  
  That's kind of the problem; it DOESN'T pay bills.
  Sure it does, it pays the rich trader's bills. Like bank robbery, it harms society but pays the bills.
  
  --
  Free Martian Whores!
16. Re:The worst sort of technological development by serviscope_minor · 2012-12-11 12:21 · Score: 1
  
  With the global economy no one is forced to trade French stocks.
  Yep, people will just ignore 5% of the entire world's economy, since it's impossible to make any money with HFT since noone made any ever before. Which is why stock markets have only existed since 1999 or so.
  
  --
  SJW n. One who posts facts.
17. Re:The worst sort of technological development by tolkienfan · 2012-12-11 12:34 · Score: 1
  
  The supply and demand curves will change resulting in French stocks being less profitable and less highly traded. Trust me, they will feel it.
  Or don't trust me: time will tell.
18. Re:The worst sort of technological development by Wildclaw · 2012-12-12 05:18 · Score: 1
  
  HFT isn't liquidity though. You simply can't provide liquidity by buying and selling quickly. Market liquidity only comes from those who buy quickly and sell less quickly.
19. Re:The worst sort of technological development by tolkienfan · 2012-12-12 06:56 · Score: 1
  
  You misunderstand the point.
  Measures such as:
  1. Per trade tax
  2. Minimum quote lifetime
  3. Cancelation fee ... necessarily increase the spreads and reduce liquidity. This is an additional cost to every trade. Thus French companies become costlier and riskier to trade.
  Wider spreads means higher cost. Lower liquidity makes it harder to adjust positions and is thus riskier.
'line of site' sic by flyingfsck · 2012-12-10 22:14 · Score: 4, Funny

line of sight
Must be the publiek skool edumakashun.
I think this poor child was left behind.

--
Excuse me, but please get off my Pennisetum Clandestinum, eh!
1. Re:'line of site' sic by Bearhouse · 2012-12-10 23:21 · Score: 1
  
  Multiple editing failures, lazy cut & paste. Error was just copied from original article.
  
  Microwave technologies have been in use for point-to-point connections for decades by the military and by broadcast television stations. Point-to-point wireless microwave transmissions, which operate in the 1.0GHz to 30GHz part of the spectrum, require line of site, though signals can be repeated along the route. A good signal -- such as between two mountaintops -- can travel as much as 300 kilometers, or around 186 miles.
2. Re:'line of site' sic by Crimey+McBiggles · 2012-12-11 01:06 · Score: 1
  
  There's a little mark that looks like this: [sic] Learn to use it.
  
  --
  Crimey
3. Re:'line of site' sic by xclr8r · 2012-12-11 04:47 · Score: 1
  
  line of sight = visual line to the object.
  
  line of site = can be Radio line of site where the path can be obstructed but the signal waves still pass through to destination. Cisco uses this in some of there documentation. (page 2 - http://www.cisco.com/web/partners/downloads/765/tools/quickreference/aironet.pdf).
  
  line of site can also mean a line from the artillery source to target. Where you draw a straight line between the two points but the artillery actually arcs above obstructions.
  
  --
  Beware of those who profit off the docile and persecute the unbelievers.
50 Year old tech by Anonymous Coward · 2012-12-10 22:14 · Score: 2, Insightful

Just like Hungry Jacks (Burger King) uses 50 year old tech to heat my burgers.
TFA slightly out of date by Anonymous Coward · 2012-12-10 22:20 · Score: 1

> These days, the largest microwave link can offer only 150Mbps, though work is being done to develop gigabit microwave technologies.
150Mbps is past. 300 - 600Mbps is common. Gigabit has been reached already.
1. Re:TFA slightly out of date by Anonymous Coward · 2012-12-10 22:29 · Score: 1
  
  I think that's done by combining 4 OC-3 radios. TFA is probably talking about individual bands. If you're talking about a link as-in aggregating bands, then you can get much more than 600Mbps.
2. Re:TFA slightly out of date by Rockoon · 2012-12-11 00:21 · Score: 1
  
  If you are talking about off-the-shelf solutions, then gigabit microwave is a happening reality. More than a few companies are more than happy to sell you (and the government) the stock equipment they offer for this. Just search the web for 'gigabit microwave backhaul' and MULTI-gigabit speeds will be in your face.
  
  --
  "His name was James Damore."
where is the random? by mangu · 2012-12-10 22:29 · Score: 1, Interesting

the market reflects the intrinsic value of the companies instead of behaving as a high-tech casino.
If it needs quick transmission of information, then it does reflect reality. It would be a casino if it depended on random factors, in which case no information transmission would be needed.
Haters gonna hate, but when you have infrastructure you can profit from economy of scale. If you want to profit you must invest, it's the reality of life.
The guy who has a dedicated link to the stock market will profit more than the guy who depends on his home broadband modem, same as the guy who has a thirty-ton eighteen wheeler will profit more from hauling cargo than the guy who depends on his 1.5 ton pick-up truck.
1. Re:where is the random? by Mitreya · 2012-12-10 22:41 · Score: 3, Insightful
  
  If it needs quick transmission of information, then it does reflect reality.
  
  Oh it reflects reality, alright. But it is detached from the companies whose stocks the market is supposed to represent
  It reacts to other people buying/selling -- a few flash crashes have already demonstrated that. One faulty algorithm accidentally dumps lots of stocks and the entire market goes into a tailspin (with no actual cause)
2. Re:where is the random? by durrr · 2012-12-10 22:49 · Score: 5, Insightful
  
  Go read up what high speed algo traders are doing and you might change that opinion.
  They are abusing their latency advantage by adding orders that they cancel microseconds later, and other manipulative events that siphons value from other traders.
  Your truck analogy would be me selling you 1.5 ton gold, and being aware that you're going to drive 2000km and sell it at a profit, after selling it to you I phone my contact 2000kms away and have him sell another 1.5 ton gold at your target destination. When you arrive there, my contact have ruined your initial profit opportunity, and you're either stuck with no liquidity or can sell your 1.5 ton gold to my contact agent at a loss. So not only did I steal your opportunity, I decided to earn money off you by selling my gold to you at first for profit, and then buying it back, at profit again.
  This is not about me having an 18 wheeler, it's about me being massively priviledged in both capital, resources and information flow and using it to vampire money from the efforts of others. It doesn't add value, or efficiency, it removes it and adds voltatility and risk to everything.
3. Re:where is the random? by SecurityTheatre · 2012-12-10 23:26 · Score: 4, Insightful
  
  High Frequency trading is essentially the action of manipulating the system, constantly creating and destroying orders faster than others involved in the market.
  By this, you can essentially become a man-in-the-middle for market transactions and skim a small amount off of each.
  Additionally, many of the algorithms simply forge orders and then subsequently cancel them faster than the system can process them. What this does is basically slow down the system for everyone else, and create a lag that they can further take advantage of to skim off the top.
  The major trading indicies are OK with this, because they are paid on a per-transaction basis, and happily collect their fraction of a cent from each of these high-speed traders.
  In some low volume, they do represent increased liquidity in the market and they do bring buy-sell spreads down. This is why it was first allowed in the 1990s by the market makers.
  Today, they represent something like 60%-80% of all market traffic and simply skim dollars off of trades. They invest big money in artificially delaying other people's transactions to manipulate the spread between a buy and sell order and to take advantage of market swings, because they can issue multiple buy-sell-buy-sell sequences before a single long-term buyer is capable of getting a single order in.
  It is nothing more than a high-tech fraud... it appears to be legal right now, because nobody has decided to stop it and has many powerful billionaires behind it, but in the end, it's not much different than the scheme in Superman 2 or Office Space. Skim a quarter penny off every transaction and I guess nobody notices....
4. Re:where is the random? by SecurityTheatre · 2012-12-10 23:34 · Score: 3, Interesting
  
  By the way, I spoke to a trader who writes these algorithms.
  She (yeah, she) told me that she thought it was evil, but she is paid too well to say anything. She seriously makes a half million USD per year AND has a private account in the trading system that returns 3% PER DAY.
  Yikes.
5. Re:where is the random? by Arancaytar · 2012-12-11 00:03 · Score: 1
  
  Hauling cargo is actually of some use to the world.
6. Re:where is the random? by Rockoon · 2012-12-11 00:09 · Score: 5, Insightful
  
  ..and then quickly recovers. You seem to want to leave that part out.
  
  The only problem is when the SEC gets involved and undoes transactions to protect the automated traders from the massive losses incurred by their incorrect valuation.
  
  --
  "His name was James Damore."
7. Re:where is the random? by sco08y · 2012-12-11 00:16 · Score: 2
  
  By the way, I spoke to a trader who writes these algorithms.
  She (yeah, she) told me that she thought it was evil, but she is paid too well to say anything. She seriously makes a half million USD per year AND has a private account in the trading system that returns 3% PER DAY.
  Yikes.
  You're making that up.
8. Re:where is the random? by beaviz · 2012-12-11 00:19 · Score: 5, Informative
  
  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))
9. Re:where is the random? by mwvdlee · 2012-12-11 00:27 · Score: 1
  
  If a millisecond latency difference matters, than random variation in transmission speeds would outweigh any value the information may hold.
  
  --
  Slashdot social media options: AIM, ICQ, Yahoo, Jabber and Mobile Text. Why no MySpace?
10. Re:where is the random? by cristiroma · 2012-12-11 00:38 · Score: 4, Insightful
  
  Congratulations, great analogy! And I wonder, how is this legal?
11. Re:where is the random? by Rockoon · 2012-12-11 00:41 · Score: 1, Informative
  
  Right, but not without destroying millions of dollars in value
  Your argument hinges on this supposed destroyed value, so surely you can discuss this with a little more depth than simply making the claim, right?
  
  And the SEC getting involved isn't a 'problem,' this is precisely what a regulatory authority is supposed to do.
  The SEC is supposed to undo transactions because an HFT lost money? Really? Are you fucking retarded?
  
  --
  "His name was James Damore."
12. Re:where is the random? by bill_mcgonigle · 2012-12-11 00:52 · Score: 4, Insightful
  
  "Now that we've established what you are, ma'am, it's simply a matter of negotiating the price."
  
  --
  My God, it's Full of Source!
  OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
13. Re:where is the random? by bill_mcgonigle · 2012-12-11 00:54 · Score: 1
  
  The major trading indicies are OK with this, because they are paid on a per-transaction basis, and happily collect their fraction of a cent from each of these high-speed traders.
  That, and that the regulatory environment has locked in the incumbents to a cartel position so that it's impossible for a new market (say a fair market where orders can't be cancelled for 15 minutes) to compete. NASDAQ couldn't be started today.
  
  --
  My God, it's Full of Source!
  OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
14. Re:where is the random? by Anonymous Coward · 2012-12-11 01:14 · Score: 1
  
  Your truck analogy would be me selling you 1.5 ton gold, and being aware that you're going to drive 2000km and sell it at a profit, after selling it to you I phone my contact 2000kms away and have him sell another 1.5 ton gold at your target destination.
  Not really. It is having the same information as you, so deciding to sell the gold faster. It is stealing from you in the same way that your truck is stealing from the donkey cart going by the same route.
  
  It doesn't add value, or efficiency, it removes it and adds voltatility and risk to everything.
  It shortens the time it takes for price corrections to happen, same as every other kind of trade. You might argue that the milliseconds is not worth how much people make on it, but you can't argue that it doesn't add value, unless you also say that having the correct price is not worth anything.
15. Re:where is the random? by nedlohs · 2012-12-11 01:47 · Score: 4, Informative
  
  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.
16. Re:where is the random? by tverbeek · 2012-12-11 01:53 · Score: 1
  
  Quickly recovers leaving victims in its wake. You seem to want to leave that part out too.
  Anyone who thinks that this quantum-mechanics stock market is a sane basis for our economy... is not.
  
  --
  http://alternatives.rzero.com/
17. Re:where is the random? by nedlohs · 2012-12-11 01:59 · Score: 4, Insightful
  
  has a private account in the trading system that returns 3% PER DAY.
  No she doesn't, she's simply likes to lie and you didn't bother doing the trivial "does that make sense" check before repeating those lies.
  Or you're doing the initial lying, of course.
18. Re:where is the random? by tolkienfan · 2012-12-11 02:04 · Score: 1
  
  Trades are usually broken due to execution outside the NBBO.
  I.e. they were outside regulations. It doesn't often happen, but the exchanges and ECNs can get out of whack, when there is too much volume for their systems.
19. Re:where is the random? by SirGarlon · 2012-12-11 02:18 · Score: 2, Informative
  
  There are several answers to "how is this legal" but they boil down to a lack of political will to outlaw the practice. You could blame the politicians for being the in pocket of big Wall Street firms, or you could blame the small investor for not marching on Washington in an outrage. Take your pick.
  
  --
  [Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
20. Re:where is the random? by tolkienfan · 2012-12-11 02:19 · Score: 4, Informative
  
  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.
21. Re:where is the random? by Anonymous Coward · 2012-12-11 02:22 · Score: 1
  
  Nonsense. Nobody does. 3% per day means owning the world in a handful of years, even with a very low starting-point.
  If she earns half a million, surely she can put $100K in the 3% account - no ? She should do that - and wait 3 years. She'll have
  1.14 * 10^19 dollars, or about a million times the GDP of the world.
  That, or someone is ... let's say *stretching* the truth a *weeeeee* bit here.
22. Re:where is the random? by tolkienfan · 2012-12-11 02:41 · Score: 2
  
  This is bullshit.
  1. Many exchanges have message rate limits.
  2. Send ing then cancelling repeatedly is illegal, and is monitored for by the exchange
  3. ECNs (basically exchanges) charge for TRADEs NOT for orders, quotes or other messages. Infrastructure for high messaging rates costs them, so they have an incentive to keep rates DOWN. In fact, they have a minimum message per trade ratio, to control this.
  4. There is no way to be a mitn. Each participant sends orders and cancels to the exchange. The exchange matches orders and creates trades, in what's called a matching engine. Participants have no way to access this, and no way to "get in the middle" of other participants orders.
  You have no idea what you are talking about at all.
23. Re:where is the random? by tolkienfan · 2012-12-11 02:45 · Score: 1
  
  Except that its untrue: they charge for TRADEs.
  High message rates are a cost.
  They actually charge a fee by volume traded to the aggressor, and rebate at a slightly lower rate to the passive participant, thus making a profit.
24. Re:where is the random? by nedlohs · 2012-12-11 02:50 · Score: 2
  
  Sure I am. If a trader wants to set his stock to automatically get sold because someone elses makes a transaction on one side of some threshold price, that's his business. He'd be an idiot of course, but that fine. Still no value is lost (you know the only claim I'm arguing against) - it's transferred to whomever bought the stock because they didn't use stock prices as the sole factor in decision making.
25. Re:where is the random? by tolkienfan · 2012-12-11 02:50 · Score: 1
  
  Oh, and by the way, the ECNs got started AFTER NASDAQ. The get a lot of their volume because they attracted market makers, so traders are confident that there is good liquidity there with good pricing. Guess what? The market makers are HFT.
  Of course, NASDAQ bought Island, and NYSE bought Arca... I guess they were too successful.
26. Re:where is the random? by Vasheron · 2012-12-11 02:53 · Score: 2
  
  Your math is wrong. In fact, she would have 100000x1.03^600 assuming each year has 200 trading days. This equates to around 5 billion dollars.
27. Re:where is the random? by egcagrac0 · 2012-12-11 02:58 · Score: 1
  
  Them as has, gets.
28. Re:where is the random? by skids · 2012-12-11 03:01 · Score: 1
  
  If one were to draw an analogy between the economy and biology, this sort of thing would be best compared to an intercranial IV for cocaine.
  Because just because we can make the anaolgy to a living organism, does not mean said organism is in good health.
  It would amuse me that individuals exist that do not recognize that what essentially amounts to spawn camping is erosive to the social contract, were it not for the fact that there are enough of them, running around in delicate areas no less, to cause so much hurt.
  
  --
  Someone had to do it.
29. Re:where is the random? by Lumpy · 2012-12-11 03:17 · Score: 1
  
  Which is why all trades should be non reversable. you placed a sell for 900,000 shared of apple on accident? Sucks to be you.
  
  --
  Do not look at laser with remaining good eye.
30. Re:where is the random? by mangu · 2012-12-11 03:29 · Score: 1
  
  being aware that you're going to drive 2000 km and sell it at a profit, after selling it to you I phone my contact 2000 km away and have him sell another 1.5 ton gold at your target destination ...
  t doesn't add value, or efficiency,
  Excuse me, please, how come phoning someone at a remote place instead of driving all the way there doesn't add efficiency?
  If anything, your analogy reinforces my own proving how right I was.
31. Re:where is the random? by egcagrac0 · 2012-12-11 03:36 · Score: 1
  
  Aren't there more like 250 trading days per year?
  You know, there's like 50 weeks in a year (after vacation), and 5 business days a week...
32. Re:where is the random? by locofungus · 2012-12-11 03:41 · Score: 2
  
  It's obviously bollocks.
  I've been paying into a self invested pension since March 2010. If I'd been making 3% per day, my very first payment into the pension would now be worth around 30,000 trillion GBP. Even if we only count trading days it I think it would be around 4 trillion GBP. (sorry, can't be bothered to work out exactly how many trading days)
  Nobody is making 3% per day compounded. Sure, 3% per day for a short while on a relatively small investment is possible. My best investment ever made a little under 2.5% per day or just over 3.5% per day if you only count trading days. But regardless of whether this was luck or skill it's impossible to maintain it.
  Tim.
  
  --
  God said, "div D = rho, div B = 0, curl E = -@B/@t, curl H = J + @D/@t," and there was light.
33. Re:where is the random? by mangu · 2012-12-11 03:43 · Score: 1
  
  You both did your calculations wrong, (1.03 ^ 600) * 100000 = 5 trillion.
  Anyhow, the GP is lying, the fictitious person who makes 3% / day clearly does not exist. Which also implies that there's no one who "writes such algorithms and says it's evil".
34. Re:where is the random? by MartinSchou · 2012-12-11 03:45 · Score: 2
  
  She seriously makes a half million USD per year AND has a private account in the trading system that returns 3% PER DAY.
  Does she make 500,000 dollars a year? Don't know, don't care.
  Does her private account return 3% per day? No.
  On average a year contains 250 trading days. 3%/day for 250 days is 1.03^250 = 1,619.22% in a year.
  If the trader mentioned put in 100$ of her 500,000$/year salary into her traders account at the end of 2009, she'd come out of 2010 with $161,900. By the end of 2011, those 161,900 dollars would have become 262 million dollars. And by the end of 2012 those 262 million dollars would have become 424 billion dollars. End of 2013 her account will be worth 686 trillion.
  Just for reference, in 2011 the entire world's GDP was about 69 trillion.
  End of 2014: 1,110 quadrillion.
  End of 2015: 1,798 quintillion.
  End of 2016: 2,911 sextillion dollars.
  Or put another way - by January 1st 2017, she'd be able to give every single person on the planet more than 300 trillion dollars each.
  The conclusion is REALLY simple: You are either full of shit or an unbelievably stupid idiot for believing her claim - and I know which one applies to the mods who modded you interesting.
35. Re:where is the random? by Anubis+IV · 2012-12-11 03:52 · Score: 1
  
  For others who are whooshing as hard as the AC did, the quote that was given is usually attributed to Winston Churchill, though there's not much evidence that he actually said it. It's part of a larger anecdotal conversation that took place at a social event.
  
  Churchill: Madam, would you sleep with me for five million pounds?
  Socialite: My goodness, Mr. Churchill. Well, I suppose...we would have to discuss terms, of course
  Churchill: Would you sleep with me for five pounds?
  Socialite: Mr. Churchill, what kind of woman do you think I am?!
  Churchill: Madam, we’ve already established that. Now we are haggling about the price.
  In the context in which it was used here a few posts back, the person offering that quote is essentially suggesting that the female developer who wrote these algorithms but was well compensated is merely prostituting herself.
36. Re:where is the random? by Lawrence_Bird · 2012-12-11 03:56 · Score: 2
  
  Yeah? And what about the liquidity credits? Thats most of what it is all about. HFT has not added to the market, rather it has destroyed the market. There is no incentive for anyone not of the HFT ilk to keep more than token orders in the system. HFT overwhelms any real (aka economic) based trading and trends. Look at the market stats for NYSE (the formatting will be bad, sorry!)
  
  Month/Yr #days shares trades dollar value/day Oct 2012 21 30,330 108,424 1,063 Mar 2009 22 87,578 330,783 1,778 Oct 2004 21 41,416 66,444 1,294 shares in millions, trades in thousdands and value in billions
  
  I'll grant that I cherry picked the data but you can get the hysterical data here and look for yourself. The question for 2012 is whether HFT has finally run its course or whether the market is nearly entirely HFT. I suspect mostly the latter.
37. Re:where is the random? by TheCarp · 2012-12-11 04:00 · Score: 2
  
  > What if I find out (legally) that somebody is going to deliver 1.5 tons of gold 2000km away and are
  > driving in a truck to deliver it. If I've invested heavily in airplanes, I could deliver 1.5 tons of gold to
  > that person and beat the truck guy so when he arrives his opportunity is lost and has to sell it to me
  > cheaper than I sold it to the target person. This is completely legal, and how the world works. I was
  > smart investing in airplanes.
  No its not. Nobody is going to deliver gold without a purchase agreement having been made.
  So even if you show up ahead of time and attempt to sell your gold cheaper, the person who was taking the delivery, while he is free to buy your gold, must also puchase all of the gold which he had already agreed to purchase, from whom he agreed to purchase it.
  That is actually how the world works. Sure there may be other circumstances depending on the nature of the agreements/laws (in some circumstances he may be able to cancel the previous order, but I doubt that such agreements would be the case for a delivery of 1.5 tons gold, and if they were, the restocking fees would probably make switching vendors that late in the game prohibitive)
  If you want an interesting exception that proves the rule, check out Laidlaw v Organ. Interesting case where a farmer cancelled a purchase agreement after delivery, and was allowed to do so by the courts... because the agreement was negotiated in bad faith (the purchaser lied claiming to not have information about the market that he was shown later to have had)
  You showing up ahead of the scheduled delivery would do nothing to invalidate the agreement.
  
  --
  "I opened my eyes, and everything went dark again"
38. Re:where is the random? by mangu · 2012-12-11 04:13 · Score: 2
  
  One faulty algorithm accidentally dumps lots of stocks
  That only harms the corporations that hire incompetent programmers who write faulty algorithms. If you have confidence in a company's business and see its price falling, what do you do? You buy. Only to sell it at a big profit after the people realize it was only a faulty algorithm that dumped the stock. Where is the harm in that? Financial Darwinism at its best!
39. Re:where is the random? by cayenne8 · 2012-12-11 04:32 · Score: 1
  
  Ummm.... The price was already negotiated.
  $500K salary + 3% return/day.
  I think she negotiated quite well.
  
  Hell, I think most any sane person would also take that deal!!!
  I would in a heartbeat....and then retire in a few years from now easily....
  
  --
  Light travels faster than sound. This is why some people appear bright until you hear them speak.........
40. Re:where is the random? by tolkienfan · 2012-12-11 04:32 · Score: 3, Informative
  
  You mean rebates. It works like this:
  You want to start a new "exchange" (ECN). No one wants to trade there - why would they, there isn't anyone buying or selling there: no liquidity.
  You come up with an incentive fee schedule that will encourage market makers, and liquidity providers:
  In every trade there is a passive and an aggressive side. Charge the aggressive side a fee (almost all exchanges do), but then rebate some of it to the passive side (almost always a market maker).
  Hence, companies can make money by providing the market making service to the new exchange. Traders are encouraged by plenty of liquidity and low fees (compared to the existing exchanges). The liquidity is there because of the incentives.
  Note that market making is very risky: leaving passive orders around the top of book is dangerous - when stocks change in value aggressors "sweep" the book, which is expensive for a market maker. The make a very small amount from most trades, but can lose it all on a single sweep.
  They have to be very low-latency to make it profitable.
  And yes, it's a service. Good luck running an exchange without market makers. Why would anyone submit orders to your empty books? What quotes would you publish?
  2009 was a high point in HFT in equities - I know what I'm talking about here. Trading took a huge hit due to the economy. Lower trading means less money for HFT. HFT makes money from busy markets, high liquidity and moderate volatility.
41. Re:where is the random? by bill_mcgonigle · 2012-12-11 04:39 · Score: 1
  
  Except that its untrue: they charge for TRADEs.
  Which is untrue? Wouldn't 15 minute open order requirements cause more trades to happen?
  
  --
  My God, it's Full of Source!
  OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
42. Re:where is the random? by cusco · 2012-12-11 04:40 · Score: 2
  
  The same as any programmer who writes code for war toys and eavesdropping systems. The street whore is at least honest about what she's doing, and the damage she can cause is pretty limited.
  
  --
  "Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
43. Re:where is the random? by tolkienfan · 2012-12-11 04:45 · Score: 1
  
  "The major trading indicies are OK with this, because they are paid on a per-transaction basis..." is completely untrue.
44. Re:where is the random? by cusco · 2012-12-11 04:46 · Score: 1
  
  Just because B is false does not mean that A is false. Besides, if she is smart enough to write that kid of code she's also smart enough not to let an account like that run for three years. A few weeks, easily, a few nail-biting months, maybe, but any longer than that and it becomes a very tempting target for the scum who employ her. Or are you under the impression that 'honor among thieves' actually exists?
  
  --
  "Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
45. Re:where is the random? by bill_mcgonigle · 2012-12-11 04:53 · Score: 1
  
  Oh, the GP's comment. Got it.
  Quite so. They must be profiting from HFT or they'd implement rules to stop it, though.
  
  --
  My God, it's Full of Source!
  OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
46. Re:where is the random? by cusco · 2012-12-11 04:53 · Score: 1
  
  Would you be dumb enough to leave a target like that laying around for three or four years? Think about it for a moment, keeping in mind what kind of slime she knows that she works with. Investments with phenomenal returns like this exist, although people like you and I don't have access to them. Just look at Hillary Clinton's "investment" in Tyson while she still worked for the Rose Law firm when Bill was governor of the state hosting their largest operations. Why do you think that someone as ignorant as Ronald Reagan left office with assets in the upper-tens to low-hundreds of millions of dollars?
  
  --
  "Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
47. Re:where is the random? by Americano · 2012-12-11 05:06 · Score: 1
  
  This analogy sucks. Who loses a thing when a high speed algorithm cancels orders microseconds later without fulfillment? No money and no shares have changed hands, and unless you can advance a coherent argument that this distorts the market value of shares, the only person arguably "losing" anything is the company operating the trading infrastructure.
  Your analogy assumes - in a way that does not represent the market at all -
  1) That you and I are the ONLY actors in the market;
  2) That there is only a SINGLE purchaser for any particular good in the market;
  3) That me getting to an opportunity faster than you could is somehow "stealing" an opportunity that you were entitled to;
  4) That I'm somehow profiting from buying back the goods I sold you at a price lower than you paid me;
  5) That the only way to participate in the market is in the micro- and millisecond time scale;
  6) That "regular traders" are in any way competing with algo traders;
  7) That acting as a middleman, buying something from one person to sell it to another, is evil when somebody does it faster than you, but not evil at all if YOU can make a profit;
  So, with your proposed scenario in mind:
  1) Why are you in the middleman game if you know you can't compete with more nimble competitors? Buy and sell your stocks based on the underlying value you believe the companies hold, and hold them for growth (appreciation in share value) or income (dividends & interest) over a longer period, rather than trying to squeeze fractions of a penny via arbitrage - if you don't have the resources to build a faster trading system, trying to be a market maker is a sure way to lose money. You have no one to blame but yourself for trying to compete at a level you don't have resources for.
  2) Why would you sell back to me at less than you paid? There are hundreds of millions of people in the market. Maybe you can't sell your goods at the $15m you wanted to to the person you wanted to, but I bet you can find another buyer willing to pay $14.7m, which still nets you a nice profit.
48. Re:where is the random? by cp5i6 · 2012-12-11 05:20 · Score: 1
  
  It's actually a flawed analogy. What you're simply pointing out is that there are inefficiencies in a particular market. Faster time to market eliminates these inefficiencies. The guy with the slower connection simply can not use the old tried and true strategy of arbitrage.
  
  Here's the breakdown.
  
  If the price of gold is 1$ in San fran, but NY is buying it at 1.5$, that is an arbitrage, you can buy in San fran and sell in NY. It means the market of gold is currently inefficient. In the old days, you could be that truck driver that picks up 1.5 tons of gold at 1$ and sell it in NY at 1.5$. Later someone built a train line that made the trip faster and just obsoleted the truck driver. In the future someone invents a teleportation machine and obsoletes the train. Regardless of the situation, the market will see less arbitrage situations as the technology improves.
  
  There are certainly wrongs with HFT, but eliminating arbitrage is not one of them.
49. Re:where is the random? by Shatrat · 2012-12-11 05:27 · Score: 1
  
  random variation in transmission speeds
  There is a word for that.MTIE, packet delay variation, or just http://en.wikipedia.org/wiki/Jitter. Latency on any long haul route is going to be measured in Milliseconds whereas Jitter will be measured in Microseconds if you use the right equipment.
  
  --
  09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0
50. Re:where is the random? by camperdave · 2012-12-11 05:32 · Score: 1
  
  Stock prices are useless as the sole factor in decision making. For example, say a stock is currently priced at $30/unit. Should you buy, sell, or hold?
  
  --
  When our name is on the back of your car, we're behind you all the way!
51. Re:where is the random? by Anonymous Coward · 2012-12-11 05:32 · Score: 3, Insightful
  
  Because they make the rules. They pay Congress. They get what they want. Its why their income has increased and most everyone else's income has not. Its why they made a profit in the last economic disaster. Its why they were bailed out knowing they would need to be bailed out. Its why they made a profit on being bailed out. Its why they all made bonuses on the fact they "failed." Its why Congress has blocked three calls to investigate and punish the people responsible for violating the law.
  Seriously, if you want to know who actually runs the would, look no further than financial institutions.
52. Re:where is the random? by nedlohs · 2012-12-11 05:44 · Score: 1
  
  That would be against the law (doesn't mean it doesn't happen of course), and isn't what is being discussed.
53. Re:where is the random? by acheong87 · 2012-12-11 05:47 · Score: 1
  
  I'm asking because I don't know and I'm curious. How do regulators determine whether an order was "manipulative," e.g. an instance of "flashing"? If there's no outright penalty per entered order, it seems an HFT might be able to subjectively justify (come up with clever, alternate, sound-sounding reasons for) at least a subset of their orders, pretending the orders had a different purpose, or were results of "calculation mistakes," or valid orders whose expected opportunities faded quickly, etc., not acknowledging their main use as manipulations.
54. Re:where is the random? by camperdave · 2012-12-11 05:48 · Score: 1
  
  5+ TRILLION according to google
  
  --
  When our name is on the back of your car, we're behind you all the way!
55. Re:where is the random? by nedlohs · 2012-12-11 06:07 · Score: 1
  
  "stock prices" includes things like "the stock price went up 50% in the last 3 seconds" and "the stock price went down 10% in the last 6 months". Lots of people use that as the sole factor in decision making - technical traders and momentum traders do that all the time.
  That doesn't mean they aren't idiots of course. Though if you can do it with someone else's money and skim bonuses and commissions off the top when things go well and have no part of the downside when it blows up then why wouldn't you?
56. Re:where is the random? by tolkienfan · 2012-12-11 06:08 · Score: 1
  
  Based on what?
57. Re:where is the random? by tolkienfan · 2012-12-11 06:18 · Score: 1
  
  I can give you an example.
  ES is the symbol for SPY futures. ES trades in New Jersey and SPY trades in Chicago. The price of the future is directly tied to the price of the underlying. Hence when the price changes (which happens all the time) in one venue you have to get the information to the other venue and adjust your orders there, or risk being swept and losing money.
  No manipulation.
58. Re:where is the random? by tolkienfan · 2012-12-11 06:25 · Score: 1
  
  Why 4 hours?
  You think HFT is a leech, but you don't understand the system. Take market making. HFT market makers keep the spreads at 1c, meaning when you buy (or sell) you get the stock within 1c of its actual value according to the invisible hand of the market. You could immediately sell (or buy) that stock for a loss of only 1c. ALL THAT MONEY (1c per share!!!) goes to one or more market makers.
  Now understand this: market makers did the same thing before HFT. But back then they couldn't do it efficiently, and thus the spreads were AT LEAST 25c, meaning you immediately lose, on average, 12.5c per stock.
  If you knew anything, you'd understand that HFT market making makes the markets more efficient, and cheaper to trade on.
  Your broker charges you more than any HFT company profits from your trades.
  Why is ignorance so loud?
59. Re:where is the random? by tolkienfan · 2012-12-11 06:29 · Score: 1
  
  I don't actually know.
  I can guess - I've seen requests for data. All brokers and traders have to keep accurate records of every order, cancel, etc. They may be required to explain why certain events occurred as they did.
  Mistakes do happen, but if a company did something that the SRO though was manipulative, they would at least be asked to stop. Having not stopped it would be very hard to claim it was an accident.
  We err on the safe side of compliance, as did my prior employer.
60. Re:where is the random? by alexander_686 · 2012-12-11 06:50 · Score: 1
  
  2 points.
  First, mathematically, everybody is using the wrong formula. (Geometric Mean)^2 = (Arithmetic Mean)^2 -(Standard Deviation)^2. She may have an average return of 3% but here geometric return (which is what you are calculating) is going to be less that. Only after we figure out the variance can we plus our number into the above formula. (And yes, I am making assumptions about the bell curve. In reality the fat tails would reduce the geometric return even more - but we have to start someplace.)
  Second, from a practical viewpoint, these things don’t scale. HFT are trying to exploit inefficiencies in the system. Chasing nickels before they go down the drain while being chased by a steamroller. These inefficiencies tend to be subtle, small, and transient.
  But yes, her story does stink of yesterday’s fish.
61. Re:where is the random? by mcgrew · 2012-12-11 07:06 · Score: 1
  
  Ambition is the root of all evil.
  Easily debunked, unless you think "ambition" only means "the love of money". There are other ambitions besides wealth, and they're mostly more important. Example: Linus was pretty damned ambitious wanting to write a free OS. That was a good ambition and nothing is evil about it whatever, Steve "Linux is a cancer" Ballmer notwithstanding.
  The love of money is the root of all evil, but it isn't the root of all ambition.
  
  --
  Free Martian Whores!
62. Re:where is the random? by tolkienfan · 2012-12-11 07:06 · Score: 1
  
  Something that only brokers can do, and it's orthogonal to HFT.
  I've never worked for a broker.
63. Re:where is the random? by pnutjam · 2012-12-11 07:21 · Score: 1
  
  ok, i'm saying having the correct price is not worth anything. Minor price differences are what make the market work.
  
  --
  Cheap storage VM.
64. Re:where is the random? by lgw · 2012-12-11 07:32 · Score: 2
  
  It simply doesn't matter where the market goes unless you buy or sell while it's going there. If you're trying to make money on minute-by-minute trading, you'll be beat bet those doing millisecond-by-millisecond trading. But if you're saving for retirement you can ignore all that. I found the "flash crash" amusing, despite having my life savings in securities affected by it. Bit silly, really.
  
  --
  Socialism: a lie told by totalitarians and believed by fools.
65. Re:where is the random? by lgw · 2012-12-11 07:38 · Score: 1
  
  There is no incentive for anyone not of the HFT ilk to keep more than token orders in the system.
  If you're talking about day-traders then sure - no loss there. But as a long term investor I simply don't care about HFT except that my trades execute more quickly now, and with less loss due to bid-ask gap. It's a good thing for me, and for nayone who typically keeps securities for years before selling them again.
  
  --
  Socialism: a lie told by totalitarians and believed by fools.
66. Re:where is the random? by Actually,+I+do+RTFA · 2012-12-11 07:39 · Score: 1
  
  The only problem is when the SEC gets involved and undoes transactions to protect the automated traders from the massive losses incurred by their incorrect valuation.
  I daresay that the problem is that the SEC is not getting involved and undoing transactions, and thus protecting the automated traders's massive gains by dubious methods.
  
  --
  Your ad here. Ask me how!
67. Re:where is the random? by lgw · 2012-12-11 08:00 · Score: 1
  
  NASDAQ could certainly be started today - it would take a bunch of money, and a bunch of the people who fully understand the regulatory environment and technology, which is just more money. It couldn't be started cheaply, but that's true in any case: this is an infrastructur-heavy business.
  Of course, such a market would suck, because withou HFT the bid-ask spread will be huge by modern standards. I remember the markets of last century, and would not want to return to that.
  
  --
  Socialism: a lie told by totalitarians and believed by fools.
68. Re:where is the random? by Minwee · 2012-12-11 08:26 · Score: 2
  
  Congratulations, great analogy! And I wonder, how is this legal?
  While it is traditional for Slashdot comments to be filled with twisted and pointless car analogies, there really isn't any law against good ones.
69. Re:where is the random? by citylivin · 2012-12-11 08:29 · Score: 2
  
  So the way I have heard HFT explained is:
  Trader 1 asks to sell Xsomething at $1.
  Trader 2 asks to buy Xsomething at $1
  Before their trade can go through, the HFT system immediately buys trader 1's Xsomething for $1.01. It then immediately sells that stock to trader 2 for $1.02.
  Thus the HFT system has increased costs for everyone, while increasing this "middlemans" worth because he is physically closer to the exchange and can intercept legitimate orders as fast as light. Should proximity to the exchange give you a license to rip people off?
  So explain please if this is not how it actually works, or why this should not be illegal.
  
  "They have to be very low-latency to make it profitable."
  Con men and scammers always try and work as fast as possible on their mark, lest they be discovered. If its as above board as you say, they should have no problem waiting 5 seconds before doing their business. If they can't wait, its a scam.
  
  --
  As a potential lottery winner, I totally support tax cuts for the wealthy
70. Re:where is the random? by Anonymous Coward · 2012-12-11 08:31 · Score: 1
  
  Blaming the small investor is like blaming the rape victim.
  The blame lies on first the industry that claims it can self regulate. Obviously it can't/won't
  Then with the politicians who refuse to change the laws that allow this.
  And finally with the media for not reporting on it in any meaningful way.
71. Re:where is the random? by steviesteveo12 · 2012-12-11 08:35 · Score: 1
  
  Flashcrashes usually end when the exchange halts trading. I don't recognise "...and then quickly recovers", I do recognise "[someone pulls the plug and then] the SEC undoes transactions to protect..."
72. Re:where is the random? by jandrese · 2012-12-11 08:58 · Score: 1
  
  You can bet that anybody who even considered outlawing this practice would have the attention of a large number of very very wealthy individuals. It's no wonder the FTC has no teeth.
  
  --
  
  I read the internet for the articles.
73. Re:where is the random? by penglust · 2012-12-11 09:41 · Score: 1
  
  It is time to implement a law where no trades become effective until 24 hours later and at that price 24 hours later. Fuck the day trader mentality.
74. Re:where is the random? by SirGarlon · 2012-12-11 10:01 · Score: 1
  
  Sorry, "blame" isn't the right word. What I meant to say is that, as we learned from the anti-SOPA campaign, if enough voters get angry enough about an issue, politicians will take notice. So there's simply not enough momentum. Yet.
  
  --
  [Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
75. Re:where is the random? by tolkienfan · 2012-12-11 10:02 · Score: 3, Insightful
  
  In your example, Trader #2 wouldn't agree, since $1.02 is over his budget.
  Here's how it really works.
  All market participants send their orders into the exchange. For simplicity let's stick with limit orders: A limit order is like a budget: I'm willing to pay up to $x for stock y, or I'm willing to sell stock y for as low as $y.
  Ignoring the open, since it complicates things, during the day all the limit orders are resting (passively) on the book. Generally these passive orders are submitted to the exchange by market makers. In liquid stocks the best buy will be 1c below the best sell - in other words trader P is willing to but at or below prise $X and trader Q is willing to sell at or above $Y and Y - X = $0.01. Since the exchange cannot fulfill those orders by matching them they must rest on the book.
  Now enter an investor - or actually his broker. He wants the best possible price. Suppose he is buying. In order for him to get a trade, he must be willing to pay at least the minimum sale price - in the example above that would be $Y. If he submits lower than that his order won't trade. If he submits higher he gets price improvement and still matches the best price available of $Y.
  The exchange cannot match at worse prices than the best bid and ask - and there is a national best bid and ask (NBBO) to protect people.
  Where does HFT come into this? He's usually P and Q. He's the passive trader. And if you simultaneously submit a 1 lot market order buy and a market order sell for the same stock you will lose $0.01 - this is how the market maker makes money.
  There is no HFT between you and the exchange.
  Note - the market maker is actually taking a significant risk. These prices can change rapidly. When they do, aggressive traders send "sweep" orders, which just means they can match several price levels. The exchange matches the market maker's order with the sweep, but the value of it has changed, and the market maker loses a significant amount of money. They avoid this by trying to adjust their prices as quickly as possible.
  Also - without the market makers you'd have an empty book - and no one to trade with.
  Make things harder/slower/more expensive for the market maker and the spreads widen - meaning it costs you more to trade. They call this inefficiency.
  You actually see this in other markets - such as government bonds where they have "work-up" which is very much like a minimum hold time. They are much more inefficient markets - treasuries are expensive to trade partly as a result.
76. Re:where is the random? by tolkienfan · 2012-12-11 10:07 · Score: 1
  
  BTW, market makers have been around for years. These days HFT market makers have narrowed the spreads to $0.01 most of the time... meaning you always trade within $0.01 of the actual value of a stock. Before HFT the market makers kept the spreads at least $0.25
  So HFT has made the spread 25 times smaller. Do we get thanks?
  Note that your broker charges you way more than the spread costs you.
77. Re:where is the random? by thebigmacd · 2012-12-11 10:12 · Score: 1
  
  I'm sure the parent poster is familiar with stop losses: they fall directly into the category of *deciding to sell without regard for cause*. Regardless of when the stop loss was set up, it was a decision that was made by a person to sell depending on conditions that do not consider cause.
78. Re:where is the random? by SecurityTheatre · 2012-12-11 11:47 · Score: 1
  
  1. Many exchanges have message rate limits.
  I'm not sure the details... however, these articles indicate they are seeking sub millisecond response times, and Morgan Stanley is recently citing a study that the percentage of trades in the market that are done by high frequency trading has skyrocketed to 84% of all activity this year (2012). Some people estimate they are "only" 50% of all market trades. Now keep in mind, this is approximately 95 million individuals and companies who are investing vs somewhere between 10 and 20 HFT systems. So they execute at a rate about 5-10 million times what a normal trader would... Meh rate limiting...
  
  2. Send ing then cancelling repeatedly is illegal, and is monitored for by the exchange
  From the Wall Street Journal February 23, 2012. Of those 83% from HFT, 90% (or a full 75% of all market activity) are orders that are subsequently cancelled.
  (From The Wall Street Journal)
  
  SEC Chairman Mary Schapiro said a large portion of equities trading has little to do with "the fundamentals of the company that's being traded." She said it had more to do with "the minuscule aberrational price move" that computer-assisted traders with direct connections to the exchange can "jump on" in fractions of a second. Such activity "worries me," Ms. Schapiro said in a breakfast meeting Wednesday with reporters. One solution would be forcing high-frequency traders to pay for the canceled trades that make up nine-tenths of all orders, she said.
  -- Wall Street Journal
  (From MoneyMorning.com)
  
  HFT players are constantly pinging stocks where their quotes are housed and displayed. They send out their orders to manipulate others to adjust their quotes, which get fed into the HFT algorithms to determine any directionality; then, if an opportunity exists the HFT computers buy or sell shares that someone else has put onto the market.
  They aren't quoting constantly as bona fide "market-makers" are supposed to do, which they claim they are acting like. They are simply putting out millions of fake bids and offers which they pull almost immediately, just to read the movement of other market participants who react to the HFT come-ons.
  
  3. ECNs (basically exchanges) charge for TRADEs NOT for orders, quotes or other messages. Infrastructure for high messaging rates costs them, so they have an incentive to keep rates DOWN. In fact, they have a minimum message per trade ratio, to control this.
  I don't know the details. Regardless, they profile very well from HFT and don't want it gone. If HFT goes away, so does some insignificant fraction of their income. Hard to argue with, they've said it themselves.
  
  4. There is no way to be a mitn. Each participant sends orders and cancels to the exchange. The exchange matches orders and creates trades, in what's called a matching engine. Participants have no way to access this, and no way to "get in the middle" of other participants orders.
  Let me quote again from several descriptions of HFT that professional analysts have written.
  (From MoneyMorning.com)
  
  They send out their orders to manipulate others to adjust their quotes, which get fed into the HFT algorithms to determine any directionality; then, if an opportunity exists the HFT computers buy or sell shares that someone else has put onto the market. They aren't quoting constantly as bona fide "market-makers" are supposed to do, which they claim they are acting like. They are simply putting out millions of fake bids and offers which they pull almost immediately, just to read the movement of other market participants who react to the HFT come-ons.
  According to this NYT article: http://www.nytimes.com/i
79. Re:where is the random? by SecurityTheatre · 2012-12-11 11:55 · Score: 1
  
  I clearly didn't do the math on it.
  She definitely said 3%. I asked 'per month?" She said "per day".
  She explained how they use the "R" programming language, which I'd never heard of...
  But clearly, it is right to say her number must be short term or unusual or something...
80. Re:where is the random? by SecurityTheatre · 2012-12-11 11:56 · Score: 1
  
  R might be the wrong letter... lol Maybe she said K? no idea, honestly, it wasn't anything I'd ever heard of...
81. Re:where is the random? by tolkienfan · 2012-12-11 12:02 · Score: 1
  
  1. So what? Lots of companies have higher message rates than an individual.
  2. I responded to this elsewhere. If its not illegal it should be. Manipulation is definitely illegal.
  3. Flashing an order doesn't put you in the middle so to speak. What's described is probably an attempt to get bots to react to a flashed quoted by putting up its own ordered which may then be seen in the quote feed. It may be something some traders enter into. But 1. It can't be done on liquid stocks (there isn't enough spread) and 2. I agree it should be illegal.
  The article is full of inaccuracies.
  Mary Schapiro sounds like she needs a lesson in simple economics.
82. Re:where is the random? by smellotron · 2012-12-11 16:53 · Score: 1
  
  R might be the wrong letter... lol
  
  R is commonly used for statistical number-crunching. On this, your memory sounds accurate.
83. Re:where is the random? by Lockejaw · 2012-12-11 17:35 · Score: 1
  
  I think the situation people mostly worry about with market making is where Alice submits an offer to sell for at least $1.00 and Bob submits an offer to buy for no more than $1.02. There's $0.02 of surplus here, and we would expect it to get somehow split between Alice and Bob. When we add in Martin (market maker) to the scene, people worry that he would accept both Alice's and Bob's offers and pocket some of that $0.02 surplus for himself. If Alice and Bob both put in their orders at the same time, then Martin is obviously left out, but it's never really simultaneous. This leaves a time window when Martin could potentially insert his own pair of buy and sell orders. If it's a rather slow market, and Bob's orders appears a few days after Alice's, it's reasonably clear what service Martin is providing (Alice can quickly and reliably offload this thing she no longer wants, and the item is readily available for Bob to buy when he finally wants it).
  On the other hand, if the market isn't so slow, and Martin is doing HFT, it's less clear what Alice and Bob gain from him. If he's able to take a position and close it in a matter of seconds, people start to wonder just how much better off Alice is from having been able to finish her sale seconds earlier. It looks like we've got diminishing returns as Martin's holding periods shorten. His claim that he's providing liquidity looks dubious in a market that has to already be pretty liquid to support the activity people see from him, so they suspect they're being hoodwinked. Modern technology enables really large scale market making, so Martin's got a lot of money flowing in, which makes people even more suspicious.
  Personally, as a rather small-time investor, I don't really fret about this. Even if it is the case that I am getting some of what would otherwise be my money skimmed off by someone claiming to have provided liquidity that was already present, I don't make enough trades for that potential loss to matter much. I worry more about whether this is a good (for society) use of the math/engineering talent we produce.
  
  --
  (IANAL)
84. Re:where is the random? by epee1221 · 2012-12-11 17:47 · Score: 1
  
  OTOH, I hear K's userbase is mostly in the financial sector...
  
  --
  "The use-mention distinction" is not "enforced here."
85. Re:where is the random? by chrismcb · 2012-12-11 19:09 · Score: 1
  
  I don't understand your point. How does 3 data points prove your point?
86. Re:where is the random? by tolkienfan · 2012-12-12 05:14 · Score: 1
  
  The thing is that has nothing to do with HFT.
  Assuming Alice and Bob are regular investors, they're broker would send the order to the exchange and their orders would trade with the market maker.
  The big difference with HFT is the spread is usually 1c whereas with the old specialist (who had the authority, BTW, to lock the book and other obnoxious things) the spreads were at 25c at least!
  People are bitching about an HFT market maker making a cent off of each trade, ignore the fact that it's a very difficult strategy to make profitable and has significant risk, and also ignore the fact that before HFT Alice and Bob would be 25 times worse off.
  They're also ignoring the fact that their broker charges MORE.
  You are wrong that the liquidity is already there. How to Alice and Bob decide what price to use? They look at the published quotes. You know where those quotes come from? The market makers' orders.
  Lastly, I don't believe you. I don't think people are worrying about 1c. I think they fear 1 millisecond trading, without understanding it.
  People have very strong opinions about HFT, but without actually knowing anything about it. Read some of the comments... at least 50% of it is just totally made up. Some of it is vicious. Ignorant, obnoxious loud opinions passing rumor around as fact.
87. Re:where is the random? by tolkienfan · 2012-12-12 05:44 · Score: 1
  
  I didn't see the whole comment on my phone, so here's a follow up.
  "They send out their orders to manipulate others to adjust their quotes, which get fed into the HFT algorithms to determine any directionality; then, if an opportunity exists the HFT computers buy or sell shares that someone else has put onto the market. They aren't quoting constantly as bona fide "market-makers" are supposed to do, which they claim they are acting like. They are simply putting out millions of fake bids and offers which they pull almost immediately, just to read the movement of other market participants who react to the HFT come-ons."
  This is actually impossible in liquid stocks. You can't "flash" the top-of-book because there are always orders at the top of book. Even in an illiquid symbol only a bot could react fast to a flash or flicker such as described. And once again - I'm totally against such practices. I believe they are manipulative. I also don't believe any of the big HFT players does it (I've worked at 1 and now work at another of the biggest) - partly because there isn't any profit in it.
  Question - how would such a flicker affect you? Are you sitting there waiting for the right price to flash up on your screen before slamming your hand down on "BUY"?
  That snippet about a 30ms window is bunk. That's not possible, since it's an absolute fact that orders get to the exchange in less than 1ms from submission (local submission - if one wants to get into travel time for the order I'd be happy to, mostly because it doesn't change my point). I've personally timed round trips into and back out of the matching engines at many exchanges.
  It *IS* true that some investment banks have internal trading desks, and that they get to fulfill orders internally, if they wish, before sending those orders to an exchange. They would be able to hold the order for some time before forwarding to an exchange. By regulations they still have to execute within the NBBO.
  It sounds like some journalist conflated this with HFT and threw in a bunch of assumptions.
  BTW You haven't proven anything, except that there is a lot of misinformation out there.
88. Re:where is the random? by tolkienfan · 2012-12-12 06:06 · Score: 1
  
  Actually, now I know what the 30ms they are talking about is.
  It isn't possible anymore. All current equities venues have dropped support for them. Not long after they allowed them, actually.
  More info here: http://en.wikipedia.org/wiki/Flash_trading
  The articles were misinformed - the person submitting the order had the option of marking the order for "flash". It was the investor who decided whether he wanted his order flashed or not. Also, no one got the order ahead of time - it could only be flashed if it had failed to match the regular way.
89. Re:where is the random? by smellotron · 2012-12-12 06:13 · Score: 1
  
  ... some HFT systems are given a 30ms "preview" of orders that are yet to be acted upon ...
  
  That behavior was called "flash orders", and it seems to be the most frequently cited evidence of "front-running" in the public markets*. I've already outlined the 3-month timeline elsewhere in this thread. They have long since died, but of course the articles are perma-linked with no indication of updates or new developments on the topic.
  *Real front-running requires knowledge of someone else's orders before they hit the exchange, in order to be risk-free. This is impossible for proprietary traders, and is illegal (but theoretically possible, cough cough) for a brokerage with its own prop desk. But flash orders were pretty darned close, because the information was deliberately delayed going to CQS.
90. Re:where is the random? by mangu · 2012-12-12 11:41 · Score: 1
  
  from a practical viewpoint, these things don't scale. HFT are trying to exploit inefficiencies in the system
  That's something I found out when I developed my own algorithms for trading. I can turn $20,000 into $20,500 every day on the intraday trade. 2.5% a day sounds awesome, but I can't get $2500 out of $100k.
  There are tricks that work only on the $millions scale, there are things that work only on the $thousands scale.
91. Re:where is the random? by hoboroadie · 2012-12-12 13:04 · Score: 1
  
  Making absolutes out of generalities tends to look pretty foolish. In fact, I made up a favorite saying, "speaking in absolutes is always a mistake".
  I'm referring to a lot of things, specifically, and I guess you think evil is subjective. Exempli gratia: Ambition=squeezing oil from stones; Evil=poisoning the Salmon. YMMV.
  
  --
  They feared that it could be used to suppress protest or support unpopular rule.
92. Re:where is the random? by Lawrence_Bird · 2012-12-12 15:08 · Score: 1
  
  Hey guy.. I have traded many markets (professionally) and quoted two way prices on demand to customers in several hundred million dollars so please dont ever try to lecture me on risk - and quite frankly what passes as a 'market maker' in the equities market is bs anyways as their obligation is fleeting and limited - and thats the 'official' ones at nyse. What you are talking about is non-retail churn. Let me cry you a river cause your bid got hit before you could cancel when Benny farted. HFT is the bane of markets. It has no positive attributes beyond short term gain for those involved at the expense of long term destruction of what once passed for markets. So... exactly which of these exchanges are so new and unestablished they still need to give commission credits? NYSE? NASDAQ? Merc? Get off of it. There is no reason why you should get a credit for leaving a firm side. If anything, you take up resources by necessitating the tracking of that side. Honestly, you would be better off defending CDO^2
93. Re:where is the random? by Lawrence_Bird · 2012-12-12 15:25 · Score: 1
  
  Lets get something clear here. There is only ONE market maker in any equity. Anyone else showing an interest is a participant NOT A MARKET MAKER, including you Mr. HFT. That you choose to show both sides (and not necessarily on the inside of the quote) is your own business but it does not make you a market maker. In addition, you are under no obligation (even woefully limited) price support and can hit the cancel button at any time. I remind you (and others) that exchanges functioned perfectly well for decades without you and clients did not have problems find liquidity. Unfortunately it is doubtful that any exchange keeps the moment by moment order book data for more than a limited time but it sure looks empty today more than a few pennies from the inside quote. Bonds (cash) are not efficient due to the limited quantity of any one issue that is available for trade. Most cash bonds are taken and held by the buyers. The 7 7/8 JPM converts of 20 may be lovely to own but good luck finding many to trade. Bond futures are just as liquid as any equity market, if not more so.
94. Re:where is the random? by Lawrence_Bird · 2012-12-12 15:40 · Score: 1
  
  Wow.. you are a trove of disinformation. 25c spreads? Minimum? Really? Yeah maybe in 1960. 1/8ths were pretty common with 1/16 on either side depending on the stock. If the market maker is quoting a price, then the liquidity for Alice and Bob is already there, by definition. What people fear is not how narrow the spread is (though that is another discussion) nor how quickly an order can be sent or filled. What they fear is that THERE IS NO MARKET. A market is a place for investors to 'meet'. Non-investor participants (ie, traders) help to smooth out the peaks and troughs in the demand for any given financial instrument at any given moment. Making the 'spread' is a side benefit, the real advantage a trader has over the investor (in most cases and in the short time horizon) is they see the flow of interest - where the buyers and sellers are and can use that to make far more than the spread. HFT on the other hand is churn far in excess of any investor need. HFT "traders" are at best 'pippers' - snipers who the parent poster correctly identified as not really adding anything for investors Alice or Bob but more correctly just stealing a penny from everyone they meet.
95. Re:where is the random? by tolkienfan · 2012-12-13 17:10 · Score: 1
  
  Duh, they were still going thru a market maker before HFT.
  You are bitching about market making not HFT.
  HFT market makers cannot churn more than investors need, since they are trading passively, hence they are only matched to investors.
  You think they trade with themselves all day? Great way to make money.
96. Re:where is the random? by tolkienfan · 2012-12-13 17:20 · Score: 1
  
  There are secondary market makers.
  And I tend to use the term slightly loosely, since most of the readership doesn't give a crap about the distinction.
  BTW you just made a better argument that liquidity is worth something than I ever could.
  HFT has improved spreads. That benefits everyone. Except the old specialist. That wasn't you, was it?
97. Re:where is the random? by tolkienfan · 2012-12-13 17:21 · Score: 1
  
  You're right that rebates aren't necessary anymore. But that was their original purpose.
  Of course, removing rebates wouldn't get rid of market makers or HFT.
  You're wrong about there being no "economic" or "real" trading. It all still works the way it ever did. It's just that information from other, even distant, markets is accounted for much quicker - so it's harder to understand.
  If market prices are no longer related to fundamentals anymore, that would imply you couldn't explain why, for example, the Facebook IPO failed miserably. But I bet you, among many others, know exactly why Facebook took such a dive, eh?
98. Re:where is the random? by tolkienfan · 2012-12-14 02:11 · Score: 1
  
  I've seem what happens when the market makers and liquidity providers pull out. The liquidity dries up. Not completely, but the spreads widen and it's much harder to trade: If you have a large position to unwind, it'll happen much more slowly AND have a large effect on the price.
  Plus, how much do you think Alice and Bob will want to ask/bid when the quotes published are $2.50 x $2.80? You think the midpoint is the best option? That's very unlikely - more likely you're either over or underpaying atthe midpoint.
  Without the market maker you have less idea of the best price.
  Plus in your examplle, either the buyer or seller could join the ask or the bid and trade just like the market maker. If they're that certain of their price. If they traded with each other on the exchange, it would either trade at $1.00 or at $1.02, depending who was passive - got to the book first. They wouldn't trade at $1.01 as you seem to think.
99. Re:where is the random? by tolkienfan · 2012-12-14 02:19 · Score: 1
  
  It is absolutely NOT based on that assumption.
  In fact most MBAs are taught that the market is at near perfect efficiency, and thus you can only do as well as the market, and then goes on to teach how to manage a portfolio to achieve it.
  HFT bring the market closer to efficiency.
  Probably why day traders are crying.
It's line of CITE you stupid fucks by Anonymous Coward · 2012-12-10 22:38 · Score: 5, Funny

Jeez! due eye half too curect every-one round hear?
1. Re:It's line of CITE you stupid fucks by Anonymous Coward · 2012-12-11 00:26 · Score: 4, Funny
  
  It's line of CITE you stupid fucks
  [Sightation required]
2. Re:It's line of CITE you stupid fucks by GameboyRMH · 2012-12-11 03:02 · Score: 1
  
  [Siteation kneaded]
  FTFY!
  
  --
  "When information is power, privacy is freedom" - Jah-Wren Ryel
High-frequency trading doesn't benefit the economy by ickleberry · 2012-12-10 22:42 · Score: 1

Only serves to make shares more volatile. Why is this sh1t allowed again? also why when a group of ordinary private individuals find a way to exploit the HFT algorithm's of the likes of Goldman Sachs do they get sent to jail and not the high-frequency traders themselves? Messed up world we live in.
Value of real world doesn't change in a microsec by captainpanic · 2012-12-10 23:01 · Score: 3, Informative

The main reason the traders want microsecond responses is to respond to each other, not to developments in the real world.
Once one trader buys shares, these change in value, which can trigger automated responses from all the other traders. And frankly, the combined algorithm of all these traders is what makes the market behave as it does. And that's so complicated that nobody can test it for every eventuality (also, the algorithms are secret). I can see that some people think that there is an element of randomness in that.
I think it is more like a double pendulum, or the butterfly effect. Science can explain what happened, looking back, but science cannot easily predict what will happen in a few minutes. It does have an element of randomness. It is not completely random, but to a layman it sure seems to be random.
Unfortunately, recent history has shown that the traders understand the market just as well as any layman. And that means this is just a form of gambling.
Get closer by edjs · 2012-12-10 23:21 · Score: 2

If your orders have to transit hundreds of km, whether it's at 3e8 or 2e8 m/s, you're already at a disadvantage compared to those that have their servers co-located with or next door to the exchange's servers.
1. Re:Get closer by Shimbo · 2012-12-10 23:35 · Score: 3, Insightful
  
  Arbitrage between different exchanges..
2. Re:Get closer by Rockoon · 2012-12-11 00:36 · Score: 2
  
  Indeed. There are a couple of companies with plans to set up shop directly in the middle of the ocean in order to maximize arbitrage opportunities between exchanges.
  
  --
  "His name was James Damore."
3. Re:Get closer by vasanth · 2012-12-11 05:17 · Score: 1
  
  still information has to travel from one end to the other (to get informationfrom one exchange and place an order on the other) irrespective of where you are located on the path..
4. Re:Get closer by Rockoon · 2012-12-11 06:28 · Score: 1
  
  still information has to travel from one end to the other (to get informationfrom one exchange and place an order on the other) irrespective of where you are located on the path..
  Consider the following 3..
  
  Allen is 0T away from exchange A and 2T away from exchange B.
  Billy is 2T away from exchange A and 0T away from exchange B.
  Chris is 1T away from exchange A and 1T away from exchange B.
  
  Chris always sees arbitrage opportunities on A before Billy does.
  Chris always sees arbitrage opportunities on B before Allen does.
  Chris also sees some arbitrage opportunities before either Allen or Billy can see them.
  
  --
  "His name was James Damore."
Dressing gowns by docilespelunker · 2012-12-10 23:26 · Score: 1

Lazy, lazy, lazy. If they gout out of their dressing gowns and actually went to the office, then they wouldn't need all this fancy stuff to do the trades.
Re:High-frequency trading doesn't benefit the econ by Anonymous Coward · 2012-12-10 23:36 · Score: 1

You've got it backwards: HFT reduces volatility and decreases the spread.
Dammit by fa2k · 2012-12-10 23:53 · Score: 1

I should have patented it back in June ;)
Next step... by Issarlk · 2012-12-10 23:57 · Score: 1

You know what's even faster ? Microwave travelling in long tunnels travelling straight between points on the surface of earth.
I'm sure some of these guys are considering it!
Re:High-frequency trading doesn't benefit the econ by The+Master+Control+P · 2012-12-11 00:04 · Score: 1

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?
Many years ago.... by hughk · 2012-12-11 00:11 · Score: 3, Informative

I was involved in establishing one of the first major Electronic Markets in Germany. The country was quite decentralised with regional financial centres so we made sure that everyone communicated with the exchange (situated in Frankfurt) at the same speed. We even had line simulators to ensure that users in Frankfurt saw similar response times to users in Hamburg.
Now exchanges are more or less forced to join the race for the bottom by offering co-lo services (rackspace in the Exchange) where you are just a LAN switch away from theeExchange infrastructure. If you don't support that, the alleged "liquidity" moves to another exchange. Inside the machines, the algorithms are now run on the graphics cards (cheap multiprocessing) so they can run evven faster. Others use custom signal processing hardware.
Users actually issuing buy or sell orders to hold are never that close, the decision making happens within the institution not in the Exchange building. The "algo" machines just act as a man in the mmiddle driving prices to their advantage. Also, the algo traders are imposing a massive load on the order book and matching code within the exchange's systems. generally speaking the systems were chosen for reliability rather than pure speed.

--
See my journal, I write things there
1. Re:Many years ago.... by Trixter · 2012-12-11 04:31 · Score: 1
  
  If you are a rack switch away from the exchange's computer, you are too far. 1ms is too much latency.
  Most of the hardware is sub-1ms. When I worked trading IT, we measured latency in micros.
  
  You need to be a virtual appliance on the same virtual host, with read-only access directly to shared memory space on the host where trades are processed.
  I'm not sure this is an actual offering you can purchase.
  Infiniband was state-of-the-art in the trading industry about 3 years ago, although things were moving towards memory-mapped 10gig.
2. Re:Many years ago.... by vasanth · 2012-12-11 05:20 · Score: 1
  
  woosh.....
10 seconds per order should be law imho by xiando · 2012-12-11 00:16 · Score: 4, Interesting

I have long argued that stockmarkets should have a 10 second order freeze. That would mean that if you place an order to buy a stock at a given price then you can't remove that order for a whole 10 seconds, you have to stand by your order for that amount of time.

Thousands of orders are placed and pulled every second, even every millisecond. There is a steady flow of orders being placed and pulled.

Consider this: Is an order to buy or sell a stock which is pulled within a millisecond a real order, or is it just market manipulation?

--
9/11: Never forget it was a false-flag operation
1. Re:10 seconds per order should be law imho by mwvdlee · 2012-12-11 00:44 · Score: 1
  
  I'd go with a much, much longer delay than 10 seconds (more in terms of hours or days), but the reality is that even adding 1 second would help. Even better if the delay was random.
  
  --
  Slashdot social media options: AIM, ICQ, Yahoo, Jabber and Mobile Text. Why no MySpace?
2. Re:10 seconds per order should be law imho by Trixter · 2012-12-11 04:32 · Score: 1
  
  I have long argued that stockmarkets should have a 10 second order freeze.
  As this would completely destroy an exchange's ability to make money, no exchange will ever implement this.
Time for FOPDOS? by fgouget · 2012-12-11 00:22 · Score: 1

Time to train flocks of pigeons to fly in the path of the microwave links? That's sure to disrupt their latency when they have to retransmit due to packet loss... One could call this Flock Of Pigeons Denial Of Service.
1. Re:Time for FOPDOS? by GameboyRMH · 2012-12-11 03:05 · Score: 1
  
  And you'll have delicious cooked poultry falling from the sky! :-P
  
  --
  "When information is power, privacy is freedom" - Jah-Wren Ryel
2. Re:Time for FOPDOS? by NicknamesAreStupid · 2012-12-11 15:45 · Score: 1
  
  Fog will do it, too.
Re:High-frequency trading doesn't benefit the econ by prefec2 · 2012-12-11 00:27 · Score: 1

It is allowed, because those who do it can make a lot of profit. And profit made counts as GDP. GDP is the measure for the wealth of you country. While it is totally bogous today, it is still used as the main measure. And the measure indicates that reducing the opportunity to make profits on finance markets will reduce the GDP which will reduce the wealth of y country. No politician wants that. Furthermore, a lot of people previously working for the finance industry are now in government positions in the USA, in Germany, in the UK, in France, in Italy (at least at the moment), in Spain and in the EU. They all are not interested in stopping the game, they played before. That would be something between telling an Junky not to fix and the Pope to become a muslim. Therefore, this will not change any time soon. It even survied the last crash.
Re:High-frequency trading doesn't benefit the econ by Rockoon · 2012-12-11 00:34 · Score: 4, Informative

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."
FPGA's replacing both fiber and microwave by Antique+Geekmeister · 2012-12-11 00:37 · Score: 2

The whole field of transmitting the high-frequency trading information seems to be going away in favor of FPGA's sitting right on the fiber leaving Wall Str.
ftp://ftp.bittware.com/documents/data_sheets/ds-hft.pdf
By putting these sorts of devices directly on leased connections from the stock market, adjacent to the stock market, they eliminate the need for the extremely expensive and often quite unreliable remote high speed connections. I was recently privileged to hear a presentation on the risks of data loss on those lines: they're apparently using multicast for high speed synchronoous transmission, But by the time you've checksummed and re-assembled your data and re-collected the lost packets, it can actually be _slower_ than normal TCP, and the the data verification technologies are often poorly tested.
The key to using the FPGA's is to tune and simplify the models that are stored and processed locally, in place of the expensive remote data centers. And updating those devices doesn't require the low latency and high speed: the analysis of stored data and updates of models can be done remotely and much more slowly.
Always the worst sort of technological development by hoboroadie · 2012-12-11 00:44 · Score: 1

I think this is where some of the money went that isn't paying the bills.
Clearly some people can't be trusted with our money.
I suggest we quit letting them play with it.

--
They feared that it could be used to suppress protest or support unpopular rule.
did microwave ever go out of style? by MickyTheIdiot · 2012-12-11 01:14 · Score: 1

I am really confused here... why this is being talked about like it is ancient tech that's been forgotten?
I used to be the admin of an outdoor recreational center and I've personally used microwave bridges a lot for these sorts of applications. It's very common in rural areas to do use microwave or open spectrum in areas where you can't just dig and put down fiber or cable. It doesn't surprise me in the least that it's being used in applications like this.
1. Re:did microwave ever go out of style? by kenh · 2012-12-11 03:05 · Score: 1
  
  Microwave links are currently in use to carry phone calls across the country - this is hardly "old" technology, it is very current technology.
  
  --
  Ken
2. Re:did microwave ever go out of style? by cusco · 2012-12-11 06:14 · Score: 1
  
  They're used for point-to-point communications in security and SCADA systems all the time. The bandwidth available for the cost is the main limiting factor in these applications.
  
  --
  "Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
3. Re:did microwave ever go out of style? by Darinbob · 2012-12-11 07:42 · Score: 1
  
  Because kids write articles these days and they think anything older than a decade or two is made of out weathered wood boards and rusty baling wire (neither of which they have ever seen outside of the movies). Even today line of sight technology is used in a lot of places in the internet or other transmission. "Cable" companies probably still use it in places. And what do people think mobile phones use anyway, they're just microwave transmissions to a repeater. Maybe these people are surprised we still use 60 year old technology of transistors or the 95 year old zipper.
  Here's the thing: is microwave faster than fiber optic for latency? No. What really speeds it up is that you have your own dedicated point-to-point link between the office and the trading center, without having to go through the internet or someone else's routers.
4. Re:did microwave ever go out of style? by smellotron · 2012-12-11 18:52 · Score: 1
  
  Here's the thing: is microwave faster than fiber optic for latency?
  
  Yes. Speed of light is slower in fiber optic cable than air at STP.
  
  No.
  
  Oh whoops! Well, to humor you, there is a technicality: Like any other networking gear, microwave dishes will have a latency for routing the information to/from fiber-optic. If that latency outweighs the speed-of-light gains for the given distance, then the microwave link is worse. However, modern microwave gear would have no reason to exist if the engineers hadn't solved this problem.
here's the difference: by Anonymous Coward · 2012-12-11 01:20 · Score: 1

Geithner & Bernanke didn't used to work for T-Mobile...
call me cynical but I suspect the reaction might be a little different if you DOS'd goldman's insid..., um, "high frequency" trading than if you affected _a_ vector to _a_ cell tower...
Why is this legal? by hoboroadie · 2012-12-11 01:23 · Score: 2

Because of certain taxes that East Asian governments impose on financial transactions, high-frequency trading hasn't made such inroads there.
As long as our government continue to codify crimes into the financial system, the system will continue to act criminally. If we restored the former definition of the word "crime"* this problem (and many, many, many others) would simply not exist.
* novel concept- forbid crime.

--
They feared that it could be used to suppress protest or support unpopular rule.
1. Re:Why is this legal? by mcgrew · 2012-12-11 04:17 · Score: 1
  
  As long as our government continue to codify crimes into the financial system, the system will continue to act criminally.
  I don't think I understand you. Are you saying we should legalize fraud and bank robbery? Almost all crimes are financial crimes, except ones like public drunkenness and murder (which sometimes involves money).
  If we restored the former definition of the word "crime"
  I wasn't aware that the definition had changed? I'm 60, and I've seen no definition of that word in my lifetime, although a lot of other words have been redefined.
  novel concept- forbid crime
  ????
  Crime is that which is legally forbidden -- insider trading, polluting, theft, fraud, prostitution, spitting on the sidewalk.
  Sorry, I simply could not understand what you were trying to convey. Is this a generational thing or something?
  
  --
  Free Martian Whores!
2. Re:Why is this legal? by RoverDaddy · 2012-12-11 04:38 · Score: 3, Insightful
  
  I don't think I understand you. Are you saying we should legalize fraud and bank robbery?
  I think hoboroadie is saying that we have -already- made fraud and bank robbery legal by the way we allow the system to work (e.g. high-frequency trading and it's associated stock manipulation being allowed - my example, not hobo's)
  
  --
  RETURN without GOSUB in line 1050
Re:In other news... by Mr2cents · 2012-12-11 01:52 · Score: 1

High frequency traders don't have toilet breaks. They are machines.

--
"It's too bad that stupidity isn't painful." - Anton LaVey
Round based system by AtomicJake · 2012-12-11 01:58 · Score: 1

The system should be modified to be round based rather than real-time. 10 seconds per round is long enough that all traders can have equal access regardless of how far they are from the stock exchange, and it is short enough that it won't be a hindrance to long-term investors. A round could spend a couple of seconds executing the trades, then publish the results, add another couple of seconds for communication, and traders will still have six seconds for calculations before the deadline for the next trading round.
This! Best idea I have seen so far - is it yours or has it been researched in more detail and been published somewhere?
1. Re:Round based system by kasperd · 2012-12-11 02:08 · Score: 1
  
  This! Best idea I have seen so far - is it yours or has it been researched in more detail and been published somewhere?
  I came up with the idea, but I think it is simple enough that others could easily have come up with it independently before or after me. So there may be detailed research of the idea, which I just don't know about.
  
  --
  
  Do you care about the security of your wireless mouse?
2. Re:Round based system by Americano · 2012-12-11 05:21 · Score: 1
  
  You have no idea how the stock market works, and so... your solution sounds elegant and workable. But it's not. Tens of MILLIONS of people would need to each 'get a turn.'
  Trivial example: What happens if I'm at lunch when it's my 'turn' to trade? Do we halt all orders until I get to take my turn? Or do I get skipped? Or do I get to trade at the front of the line the moment I get back? And how can you not see potential for abuse in ANY of those solutions?
3. Re:Round based system by kasperd · 2012-12-11 05:51 · Score: 1
  
  Read what I wrote again. There is no such thing as turns. In fact the word turn was not even used until you brought it up. There are rounds and each round everybody gets to place bids. Until the deadline of a round you get to place or modify your bids, but none of the bids are published until after the deadline. After the deadline all bids are published and trades are executed according to the bids.
  
  In the simplest model bids are valid for a single round only, and if they could not be matched in that round they are automatically cancelled again. You have to keep placing the bid each round if you still want to be trading at the price of your previous bid. If you leave for lunch and don't have a computer refresh your bids while at lunch, you simply won't be trading for that duration.
  
  In a slightly more complicated model bids are valid until a specified expiration time. Such bids are valid for multiple rounds, and if you want to cancel the bid before expiration, you have to explicitly cancel it. In each round a time stamp of the next deadline will be published, any active bids expiring after that deadline are still valid in the next round, unless cancelled before the deadline.
  
  In principle the two models are the same. The expiration time is just an optimization. Without it traders would need a computer to republish their bid every round, which would consume some networking resources. But the more complicated model could trivially be simulated with the simpler model. If traders are going to update their prices each round, the benefit of bids valid for multiple rounds disappears.
  
  The point of the model is that once information is published, there is a number of seconds until the next deadline, during that period everybody have the same public information to work with. There is no rush to submit bids, because any bid before the deadline is equally valid. A few microseconds more or less for computation isn't important when you have more than five seconds to complete the computation you need in order to place a bid.
  
  Effectively each round is a double auction with secret bids.
  
  --
  
  Do you care about the security of your wireless mouse?
4. Re:Round based system by Americano · 2012-12-11 07:48 · Score: 1
  
  I took rounds to mean turns. My mistake.
  However, in what way does this "solution" actually solve any of the problems you allege HFT causes? In fact, in what way is this any different than the current system, in practice? All you've done is introduce an arbitrary delay into the system. Right now, the "rounds" are very short, and very fast, and standing orders such as you've described exist quite happily. All you're doing is saying, "Basically, we have to make the market work no faster than SLOW computers could have done the trading 20 years ago."
  What this will, in practice, do, is drive HFTs out of the market - which will widen bid-ask spreads and lower liquidity, which means you will sometimes save a little more money, and sometimes lose a little more money, when executing trades. The profits made by HFTs comes from their ability to narrow the bid-ask spreads and extract their profits from that arbitrage. They are not "stealing money" from you, there is no "problem" that this introduction of an arbitrary delay would solve. The money the HFT makes is the money that would have been lost to the inefficiency of trading that you're creating by introducing arbitrary trading delays.
Re:So... by nedlohs · 2012-12-11 02:05 · Score: 1

What do you think light is?
True story by rickb928 · 2012-12-11 02:31 · Score: 1

I was raised around Bangor, Maine, and among other distinctions Bangor was the smallest media market in the U.S. with all four major networks, which at the time were ABC, CBS, NBC, and 'public broadcasting'. By far the smallest. Many mid sized cities in the pre-cable era had two of the four and counted themselves lucky. Our ABC affiliate was sometimes percieved as substandard in many ways, though they worked very very hard, but that;s another story.
Anyways, it's 1976, bicentennial US celebrations and all, and for the Fourth of July our NBC affilate booked Willard Scott, NBC Today Show weatherman and bon vivant, to appear locally, which they did as part promotion and part scthick.
This is a major faux pas, and Willard should be somewhere else on the 200th July 4th celebration... ANYWHERE ELSE. Like D.C., or Rockerfeller Center, ANYWHERE ELSE.
And NBC thought they had an out. The Bangor affiliate, WLBZ, used a terrestrial microwave link to connect network programming from the Portand affiliate, WCSH, and send local progamming back down. And this worked very well, with very rare outages due to exceptionally heavy precipitation. Quality was good, hardware was very reliable, and it saved on a satellite dish and the associated costs. But NBC didn't trust it, and tied to back out of the appearance claiming it was not up to standard, blahblahblah.
WLBZ nailed it. They proved reliability, they proved signal quality, and they had a cameraman that was just an exceptionally talented and superbly competent. With no easy out short of annoying an affiliate and paying money, they got Willard up there, and it was a perfect spot.
Microwave is underrated. Well-built equipment is very reliable, data transmission is well understood, and I get this use of it by the quants and HFT gang immediately. It seems old-fashioned and out of date at first glance, but no, it probably will work for a long time. thinking about some of the DS wireless hauls I installed, I wish we had S-band microwave instead. I wish I was working with microwave again, great stuff.

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deleting the extra space after periods so i can stay relevant, yeah.
1. Re:True story by kenh · 2012-12-11 03:04 · Score: 1
  
  The technology is being used to allow trading firms to locate their servers in the midwest, rather than closer to NYC... Can they really save that much money to justify the microwave link compared with simply locating their servers closer to the exchange?
  
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  Ken
2. Re:True story by cusco · 2012-12-11 06:19 · Score: 1
  
  They're playing on the latency between the NY exchange and the Chicago exchange. This is the same reason they someone just coughed up several millions to run their own dedicated fiber across the Atlantic Ocean, so that they will have less latency between the London exchange and New York exchange than their competitors.
  
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  "Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin
3. Re:True story by rickb928 · 2012-12-11 23:52 · Score: 1
  
  Are you retarded? My story wasn't about microwave. It was about using unexpected tech and getting results despite objections.
  Swoosh much?
  
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  deleting the extra space after periods so i can stay relevant, yeah.
Re:Obvious... by vlm · 2012-12-11 02:42 · Score: 1

I wonder how they compared radiation/glass speed through air?
Roughly freshman 2nd semester physics lab, compare the thickness of a glass lens to its focal length to figure the glasses index of refraction, which is just a weird way of expressing how much slower light travels in the glass.
We also did an interferometer lab with a sealed clear tube where the air was sucked out by a vacuum pump and then using monochromatic light you'd count fringes moving as air leaked in a needle valve. Simple gear, but fancy enough to measure how much air slows down light. This will be the next step, evacuated waveguide instead of aerial RF.
In the world of "high tech" you just buy a $50K TDR and a $150K OTDR and measure how long (long as in time) certain cables and stuff are.
Cheapie method involves a long piece of cable (or fiber, or mirrors, or...) looping around a really fast inverter and see what frequency it oscillates at. Lets see, an 80 meter wavelength is about 4 MHz so 40 meters of cable would resonate as a halfwave around 4 MHz or so, right? Or you play games with resonators.
There's about a zillion ways to do it.

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"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
Or, you could just move your servers closer to NYC by kenh · 2012-12-11 02:59 · Score: 1

From the story:

One new hot market for microwave providers is between New York and Chicago, both cities with many financial services firms
If transmission speed from Chicago to NYC is an issue, why not move the servers closer to NYC? Can a microwave link to Chicago really be quicker than a fiber link from Secaucus?

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Ken
Recipe for disaster? by pev · 2012-12-11 03:00 · Score: 1

The whole concept of high frequency trading and trying to out-do competition using algorithmic trading beating competition by microseconds just sounds like a future disaster guaranteed to happen. The cock-up earlier in the year by Knight Capital should be viewed as only an overture of things to come.
Now, I understand the concepts behind how algorithmic trading works in principle and what potential it has for fuck ups and to me it seems like the best way to attempt to avert such things would be to enforce an artificial rate cap on trading speed. For example, electronic trades could be enforced to only be allowed to occur (for everyone) at 10ms intervals. This would kill dead all the potential for crazy algorithmic loops at massive speed (well, still what I'd think of as high speed I suppose!) but not affect normal trading. Can someone with a proper knowledge of the way the stock markets work explain (briefly) why this would or wouldn't work?
This is bullshit by AndyKron · 2012-12-11 03:33 · Score: 1

This is bullshit. This is not what trading is about and I can't see any benefits to it. Something needs to change.
Crime by NewYork · 2012-12-11 03:37 · Score: 1

"Behind every great fortune there is a crime." --Honore de Balzac

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Casteism
HFT versus self-driving car analogy by LaggedOnUser · 2012-12-11 03:45 · Score: 1

It's funny how Slashdot, which is so against computer-automated HFT, is equally in favor of the self-driving car. Consider what would happen if, due to some unrecognized design flaw, all the self-driving cars of the world were to crash at once. The resulting mash-up would put stock market flash crashes to shame... Anything can be automated and scaled up, including disasters. At least with HFTs, it's just someone's retirement savings that is getting crushed.
1. Re:HFT versus self-driving car analogy by SleazyRidr · 2012-12-11 05:42 · Score: 1
  
  Slashdot is not a single hive-mind, that very scenario gets brought up most times there's an article about self-driving cars. Also, if you'll look up the thread you'll see some people coming out in favour of HFT. Mind=blown?
  
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  Is 1563649 a prime number?
2. Re:HFT versus self-driving car analogy by shutdown+-p+now · 2012-12-11 07:30 · Score: 1
  
  Self-driving cars have obvious utility for us. HFT does not - it only has utility for people running HFT algorithms on expensive colocated hardware.
3. Re:HFT versus self-driving car analogy by Actually,+I+do+RTFA · 2012-12-11 09:03 · Score: 1
  
  It's funny how Slashdot, which is so against computer-automated HFT, is equally in favor of the self-driving cars... Anything can be automated and scaled up, including disasters.
  One, driving cars produces value. Self-driving cars therefore automate a socially beneficial activity. Arbitrage benefits society only when it helps builds markets, otherwise it only benefits the arbitragers. And HFT is arbitrage where a market already exists.
  Or, to use a different analogy, it's why I can be in favor of automating tellers at a bank, but not automating the bank robbers.
  
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Re:Or, you could just move your servers closer to by abies · 2012-12-11 03:53 · Score: 1

I suppose that they have algo datacenters co-located with exchange in both locations for immediate trading - but they want to perform some kind cross-market arbitrage accross locations. And when arbitrage opportunity comes, you probably have just these 1-2ms of headstart to execute it.
Still, I'm suprised that with so many repeaters (they have to put one each 100-300km?) they have less than 0.5ms overhead compared to speed of light.
Anyway, these mountain-top signal repeaters will come handy when New York will have to call Rohan for help.
Low latency benefits tha small traders by mangu · 2012-12-11 04:04 · Score: 2

A round could spend a couple of seconds executing the trades, then publish the results, add another couple of seconds for communication, and traders will still have six seconds for calculations before the deadline for the next trading round.
Do you know how your system would work? The big traders would hold their trades until the last microsecond of the time block. This would happen no matter which deadline you use.
Keep the quotes secret, you say? Well, I have some bad news for you. The big investment banks have information about the trades that go through them. They know the way the wind is blowing. You don't know that.
The longer the latency is, the worse it is for the small trader. Information ALWAYS helps.
High frequency trading helps the big guys without harming the small ones. I ought to know, I'm a private investor. I watch the prices and see big trades going through. There are times when my own trades are "big", When I buy $50000 of a small share the price may go up $0.07 as a result. I can "manipulate" the market just like the big guys do.
It's just a matter of economy of scale. If I had more capital, I could invest more, but for the capital I have it doesn't pay to squeeze 0.001% more. My broker has a wide range of tools, I pay for those that fit my portfolio, it's as simple as that.
Let the people who work the market and understand it create the rules, don't try messing with what you don't understand. Amateurs are likely to fuck up things.
1. Re:Low latency benefits tha small traders by kasperd · 2012-12-11 06:44 · Score: 1
  
  Do you know how your system would work? The big traders would hold their trades until the last microsecond of the time block. This would happen no matter which deadline you use.
  If the system was done like I suggested waiting until just before the deadline would give you a disadvantage. The longer you wait the higher the risk of missing the deadline. Putting in your bids early don't harm, they only gets published after the deadline. Additionally the system could allow you to modify your bids until the deadline if you should wish to do so, but there won't be any new information available within the system during that period, so it is unlikely to be of much benefit to be able to modify bids like that.
  
  The big investment banks have information about the trades that go through them. They know the way the wind is blowing.
  So, some people may not be accessing the market directly, but rather be trading by proxy (or whatever the technical term is for this sort of trading). Shouldn't change anything if the company you choose to proxy for you is trustworthy. But if you do trades through a company without any agreement about confidentiality, and if that company even utilizes information about your trades (which is not yet public) to optimize their own bids, then of course they get an advantage. That may not fall under the definition of insider trading, but it does sound like the same ballpark to me.
  
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  Do you care about the security of your wireless mouse?
2. Re:Low latency benefits tha small traders by mangu · 2012-12-12 11:52 · Score: 1
  
  The longer you wait the higher the risk of missing the deadline.
  Let me see if I understand, are you proposing to make everyone wait a random time before their trades are accepted? Nothing could be less fair than that.
  The big traders would split their business into millions of small trades, ensuring that they got the best average possible. You and I would be fucked up.
  
  some people may not be accessing the market directly, but rather be trading by proxy
  Evidently, you have never bought or sold anything on the market.
  Everyone does business through proxies, they are called "brokers". You go through a lot of paperwork and pay a stiff fee to become a broker. There are a lot of regulations in place to make sure brokers comply to a set of ethical guidelines.
  If everyone had the same level of access to the market as brokers have today, we would have two nasty side effects.
  First of all, every transaction would be encumbered with a very high fee, which would mean only the very biggest investors could possibly get any profit from trading.
  Second, that would still leave the market operator itself in a privileged position, open to all sorts of corruption.
Re:Or, you could just move your servers closer to by stymy · 2012-12-11 04:43 · Score: 1

The point is to engage in arbitrage between the exchanges in NY/NJ and Chicago. Those servers are usually placed right between the two exchanges in order to minimize latency.
End This Game by omb · 2012-12-11 05:27 · Score: 1

This is one of the most useless, wasteful, resource consuming examples of mis-use of the market system known to man! It needs not only regulation, but to be prevented entirely. Unlike other ploys in the market, eg naked -v- covered shorts, HFT brings nothing but the ever greater possibility that the market will implode due to computer error, though it took 45 minutes for the 600M loss earlier this year.

All market instructions should have a MANDATORY, short, say 5 second validity. This would take the profit of the HFT war, mean that non-institutional entities couls trade and, contrary to the nonsense that will be posted in reply, harm not at all liquidity or pricing accuracy. What they would do is clip singularities, which would also mitigate rash technical trading.

We all stand to loose from this and only hedge funds and investment banks will be constrained. Any hold time, even 1 second will de-motivate this wasteful competition.

MFG, omb
I call bull***t by hibji · 2012-12-11 05:36 · Score: 2

This article seems to disagree with you:
http://www.ft.com/cms/s/0/d5fa0660-7b95-11de-9772-00144feabdc0.html#axzz2ElVkh9ow
"Beyond rebates, another key concern is the practice of flashing prices, which helps market makers or investors discover where others want to buy or sell stocks. This practice is widely used by high frequency traders and is allowed by BATS, Direct Edge and Nasdaq OMX, while NYSE Euronext has been a vocal critic against the practice."
This was an older article, but still... What do you say about this?
1. Re:I call bull***t by tolkienfan · 2012-12-11 06:07 · Score: 1
  
  In terms of black letter regulations, I admit it's been a while since I did the series 7...
  Manipulation is definitely covered in black letter law, and flickering would come under that blanket regulation.
  FYI We used "flicker monitors" to detect bad behavior in our algorithms so we could shut them down before there were any worse consequences. I guess I might have assumed there was a particular regulation involved. But any attempt to manipulate the price is definitely illegal.
  If some HFT firms are using flickering, then I agree it should be outlawed.
  You have to be careful, though to ensure that legitimate activity isn't affected: As a market maker placing orders the the top of book leaves you exposed to sweeps which is a significant risk. They have to be able to move their orders around, regardless of how long the order has been sitting. Otherwise market makers will be unable to profit from the narrow spreads we have today, and wider spreads means higher cost to traders - even institutional and typical investors.
2. Re:I call bull***t by smellotron · 2012-12-11 16:47 · Score: 2
  For anyone who doesn't have a login for ft.com, you can view the google cache (High Frequency Trading Under Scrutiny). The specific practice dubbed "flash orders" is not described in further detail, but here is a timeline of the relevant press releases:
  
  Before June 3 (sorry, cannot find any links): BATS,NASDAQ propose "flash orders" to SEC, (weakly) justifying compliance with existing regulations
  
  June 3: DirectEdge announces support for flash orders
  
  June 5: NASDAQ offers FLASH orders
  
  June 5: BATS offers BOLT orders
  June 7: BATS CEO newsletter discusses hazards of flash orders, two days after the initial release
  
  June 30: BATS CEO newsletter defends fairness of specific BOLT implementation, reiterates hazards of flash orders in general
  
  September 1: BATS ceases BOLT orders
  
  September 1: NASDAQ ceases FLASH orders
  
  September 18: SEC rule proposal to ban flash orders
  
  November 20: BATS supports the SEC's proposed ban on flash orders
  
  November 20: DirectEdge opposes the SEC's proposed ban on flash orders
  
  So yeah, the particular article you linked is abso-darned-lutely correct about flash orders. But it's wayyy out of date. If you read through the various exchanges' discussions and comments, there's some very interesting back-and-forth going on:
  
  DirectEdge accuses NYSE of being anti-competitive: NYSE did not implement flash order types, and it was expected that these orders would shift liquidity to NASDAQ/BATS/DirectEdge. All exchanges acted in their own self-interest here, because NYSE is the figurative gorilla in the room.
  
  BATS implements "me too" functionality to keep in competition with NASDAQ, but is very quick to distance itself from the controversy.
  
  Several exchanges highlight the (historically) new trend of liquidity moving into dark pools, and the risk which that poses to price formation in the normal exchanges. Hey, looks like they were right!
  
  Everyone releases news in lock-step. It's like a big game of chicken, nobody wants to publish early because it just gives "ammo" to the others.
3. Re:I call bull***t by tolkienfan · 2012-12-12 07:02 · Score: 1
  
  The flash orders its referring to isn't the practice of flickering I had thought.
  It's actually an order type that ALLOWS participants to "flash" their orders. You don't want your order "flashed", you never had to. The "flash" refers to forwarding the order AFTER it failed to match anything at the matching engine, to give it another chance of matching something.
  It was a big non story.
  Most importantly, they were discontinued:
  http://en.wikipedia.org/wiki/Flash_trading
  Sorry for the confusion.
ob Pratchett by Richy_T · 2012-12-11 05:45 · Score: 1

Just be careful if they hear about the speed of royalty.
Re:On another note... by tolkienfan · 2012-12-11 06:15 · Score: 1

Because I actually know that's not true.
You realize you contradicted yourself? If I take a fraction of 1c out of your investment per share, how much did you lose in order to starve to death?
Note that only 1 market maker could possibly be involved or the spreads would be wider... you buy (invest in, if you prefer) 100 shares. The seller sold them to you at the going rate. Exactly how do you think you got that "going rate"? You realize that the best ask would only be 1c higher than the price you got?
No, of course not. You know nothing, but have an opinion. And you're willing to let someone die over it.
Early retirement by ThatsNotPudding · 2012-12-11 06:23 · Score: 1

A working stock market is the SEC's #1 concern.
Rational and moral; not so much. Gotta keep that Golden Parachute consultancy gig viable!
1. Re:Early retirement by tolkienfan · 2012-12-11 06:42 · Score: 1
  
  They're not called the morality commission.
  Seriously though, almost all of their regulations concern protecting the investor. I know - I had to learn them for the series 7. The test is 6 hours long.
Re:On another note... by lgw · 2012-12-11 07:47 · Score: 1

You've got it backwards. HFT benefits normal buyers and sellers. As liquid market always does, and arbitrage always does. A small bid-ask gap is good for both sellar and buyer. This is intense competition between market-makers which means the rest of us get to keep more.
That's how markets work. Sheesh, what do they teach kids these days.

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Socialism: a lie told by totalitarians and believed by fools.
Don't forget low-e glass by citylivin · 2012-12-11 08:08 · Score: 1

Seems to block wifi from my tests around the office. New buildings and new windows are often low-e these days it seems. I haven't seen any articles about it, but as for anecdotal experience, I am 100% sure it does muffle wifi to varying degrees..

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As a potential lottery winner, I totally support tax cuts for the wealthy
Re:High-frequency trading doesn't benefit the econ by lgw · 2012-12-11 08:15 · Score: 1

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?
Yes, yes they do. The worst volatility happens when there are no trades at all! Commodities markets occasionally have "limit down days" or "limit up days" where the price moves too far form the previous evening, so the market shuts down without anyone gettng to trade (well, technically one trade happens). That sort of thing really sucks, because you can't exit a position that you really need to exit.
Volatity is how much the price moves - this is orthagonal to how many trades happen along the way. Intense competition between market makers benefits real buyers and sellers!

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Socialism: a lie told by totalitarians and believed by fools.
Re:High-frequency trading doesn't benefit the econ by korbulon · 2012-12-11 21:18 · Score: 1

Here is one citation and if you want the PDF, try here. Data and facts trumps FUD every day of the week in my book.
I applaud your attempt to back up your claims with citations. However, the source of that first article is somewhat suspect (authors have a background in the banking industry - not exactly what you would call disinterested parties) and the claim itself is tenuous at best. Does high speed trading increase market liquidty? Yes, I think that is almost self-evident: increased trading activity cannot help but to increase liquidity (it certainly doesn't decrease it). "Informativeness"? I'm not sure what that even means in this context, sounds like a weasel-word, almost like "truthiness".
But the most important question that's not being asked is: do the benefits of high speed trading outweigh the risks? Absoltuely not [citation needed].
A duck! by hoboroadie · 2012-12-12 13:16 · Score: 1

We've made fraud and bank robbery a career path. My tinfoil-hatted side thinks the "War on Terror" is a thinly concealed effort to stem the tide of Islam and the threat Sharia poses to the Banking System. I'm not religious or theistic, but I've read those books and see the rules as common-sense guidelines to prevent general mayhem in a society that actually needs to be told not to fuck the goats.
Riba is haraam.

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They feared that it could be used to suppress protest or support unpopular rule.
Nerdy but immoral by Trogre · 2012-12-13 16:33 · Score: 1

This is news for nerds, and great to see old line-of-sight wireless technology being used.
However are there any redeemable features of this HFT role? Because I struggle to find any description for High-Frequency Trader that is more polite than "parasitic scum that contributes nothing to society". Most jobs at least make some positive contribution to society as a whole in exchange for wages. These guys spend their days finding ways to exploit society.

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"Nine times out of ten, starting a fire is not the best way to solve the problem." - my wife