Slashdot Mirror
High-Frequency Traders Use 50-Year-Old Wireless Tech
jfruh writes "In the world of high-frequency stock trading, every millisecond is money. That's why many firms are getting information and sending big orders not through modern fiber-optic networks, but using line-of-site microwave repeaters, a technology that's over 50 years old. Because electromagnetic radiation passes more quickly through air than glass, and takes a more direct route, the older technology is seeing something of a renaissance."
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.
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.
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.
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!
Jeez! due eye half too curect every-one round hear?
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.
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....
..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."
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
private account in the trading system that returns 3% PER DAY.
In other words. If she invest $1000 in her account, she will have $136.423.718 after two years of trading. Insane - or she might have been exaggerating.
($1000*1.03^400 = $136.423.718 (200 trading days per year))
You really think algorithms that feed off of and fight each other on microsecond timescales, placing and then shorting more orders for shares of companies than exist in the entire world, reduce volatility?
I know for a fact that HFT's reduce the spread between BID and ASK because numerous studies have been done showing empirically that this is the case. This means that all the people that cry that they are "siphoning money off the market" and other such crap are full of shit. You are getting better BID's and ASK's because the HFT's are in the market, therefore their percentage of the transaction is just a few for a worthwhile service.
Here is one citation and if you want the PDF, try here.
The New York Stock Exchange automated quote dissemination in 2003, and we use this change in market structure that increases AT as an exogenous instrument to measure the causal effect of AT on liquidity. For large stocks in particular, AT narrows spreads, reduces adverse selection, and reduces trade-related price discovery. The findings indicate that AT improves liquidity and enhances the informativeness of quotes.
Data and facts trumps FUD every day of the week in my book.
"His name was James Damore."
Congratulations, great analogy! And I wonder, how is this legal?
"Now that we've established what you are, ma'am, it's simply a matter of negotiating the price."
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
No value is destroyed other than for those who decide to sell their stocks because the prices changed with "no actual cause", and even that value isn't destroyed it's transferred to those who bought the stocks when they were priced way under their actual value.
No 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.
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.