Flash Mobs of Trading Robots Coalescing To Rule Markets

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Flash Mobs of Trading Robots Coalescing To Rule Markets

Posted by samzenpus on Thursday September 12, 2013 @12:08AM from the john-henry dept.

An anonymous reader writes "Financial markets experienced a series of computer glitches recently that brought operations to a halt. According to a researcher at the University of Miami, mobs of ultrafast robots, which trade and operate at speeds beyond human capability, may be responsible for these "flash freezes". From the article: '"Even though each trading algorithm/robot is out to gain a profit at the expense of any other, and hence act as a predator, any algorithm which is trading has a market impact and hence can become noticeable to other algorithms," said Neil Johnson, a professor of physics at the College of Arts and Sciences at the University of Miami (UM) and lead author of the new study. "So although they are all predators, some can then become the prey of other algorithms depending on the conditions. Just like animal predators can also fall prey to each other." When there's a normal combination of prey and predators, he says, everything is in balance. But once predators are introduced that are too fast, they create extreme events.'"

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So, we've gone from ... by Anonymous Coward · 2013-09-12 00:13 · Score: 1

So, we've gone from flesh-and-blood sharks on wall street, to robot ones. Or maybe they're still flesh-and-blood, but have lasers?
1. Re:So, we've gone from ... by Anonymous Coward · 2013-09-12 00:37 · Score: 1
  
  It's more like Deep Blue beating Kasparov.
2. Re:So, we've gone from ... by DragonTHC · 2013-09-12 01:31 · Score: 2
  
  I think the term they're looking for is botnet.
  It may be legal software on machines they own, but it's still a botnet.
  
  --
  They're using their grammar skills there.
3. Re:So, we've gone from ... by Russ1642 · 2013-09-12 01:42 · Score: 3, Informative
  
  Botnets are a coordinated networks of computers under a single malicious control. However, these trading 'robots' are individual computers under malicious control. They may seem like they coordinate with one another but they operate completely independently, reacting to the market not to some master controller.
4. Re:So, we've gone from ... by Anonymous Coward · 2013-09-12 05:39 · Score: 0
  
  How can they prove they're not following the same spec in a coordinated effort to manipulate prices?
5. Re:So, we've gone from ... by davester666 · 2013-09-12 06:27 · Score: 1
  
  While they might pick at each other when they are alone, they all group together to go after the soft, fleshy ones when present.
  
  --
  Sleep your way to a whiter smile...date a dentist!
Should be a tax on every transaction by Anonymous Coward · 2013-09-12 00:15 · Score: 4, Interesting

Every time I buy a stock or sell one, the IRS and other taxing authorities suck some money out of me.
When these computers buy and sell shares several times a second, they do not get taxed. That is not fair.
There should be a tax maybe .001 cents per transaction. That would cut the amount of chatter and computer predation.
Some of these systems see what slow dim you are going to buy, jump ahead of you in line, buy it and then sell it to you.
You do not get the best price, they get a profit. If they were taxed on both ends of that, they would not do it and you would get a better price.
1. Re:Should be a tax on every transaction by khallow · 2013-09-12 00:21 · Score: 3, Insightful
  
  Every time I buy a stock or sell one, the IRS and other taxing authorities suck some money out of me.
  
  When these computers buy and sell shares several times a second, they do not get taxed. That is not fair.
  I'm pretty sure the IRS gets their cut too. But they get a cut of profits just like they do of your profits.
  
  There should be a tax maybe .001 cents per transaction.
  Why? No one has explained why anything needs to be done at all. It's all "rich people are making money therefore we need to screw it up for them".
  
  That would cut the amount of chatter and computer predation.
  And why is that considered a good thing? I think we need more chatter and computer predation.
  
  Some of these systems see what slow dim you are going to buy, jump ahead of you in line, buy it and then sell it to you.
  No, they don't. They don't have ESP. They can't see what you do on a market before you actually do something on the market.
2. Re:Should be a tax on every transaction by Thanshin · 2013-09-12 00:21 · Score: 3, Interesting
  
  When these computers buy and sell shares several times a second, they do not get taxed. That is not fair.
  Laws aren't made to be fair.
  
  There should be a tax maybe .001 cents per transaction. That would cut the amount of chatter and computer predation.
  That would go against the people who make the laws.
  
  Some of these systems see what slow dim you are going to buy, jump ahead of you in line, buy it and then sell it to you.
  You do not get the best price, they get a profit. If they were taxed on both ends of that, they would not do it and you would get a better price.
  And that's the reason for such tax not to exist. Because you getting a better price is not the desired outcome.
3. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 00:23 · Score: 1
  
  What the fuck are you on about? The people or companies that OWN those computers pay taxes on any profits made on the trades they do, you stupid shit.
  These aren't self-directed, self-aware machines that have discovered that "trading the stock market" is a fun way to spend their lives, that have somehow magically managed to conduct off-the-books trading.
4. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 00:26 · Score: 5, Insightful
  
  Why?
  Because we, the people, end up bailing out these irresponsible fuckers who have turned Wallstreet into a casino. The next bailout better be paid in advance by those who caused it, hence a tax on gambling with stocks.
5. Re:Should be a tax on every transaction by alexander_686 · 2013-09-12 00:28 · Score: 3, Informative
  
  No, they are taxed on their profit. They are even taxed on their potential profit. “Trading Positions” are taxed on their unrealized loss at the end of every year. So in fact they have to pay more profits.
  And there has been a lot of debate on the effect of a Tobin tax the actual effect has been less then advertised. When France introduced one last they got more volatility, lower liquidity, and higher spreads. The last 2 imply that the middle men (such as HFT) were making more money per trade and “stealing” more profits from small stock traders.
6. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 00:32 · Score: 0, Troll
  
  They don't have ESP, but they can see buy orders before they are executed.
7. Re:Should be a tax on every transaction by Thanshin · 2013-09-12 00:33 · Score: 4, Insightful
  
  Because we, the people, end up bailing out these irresponsible fuckers who have turned Wallstreet into a casino.
  Did you decide to bail anyone?
  Did you have any choice in whether to bail them?
  Did you have any power at all?
  We, the people, didn't bail anything nor anyone. We were robbed of a fraction of our production by the powerful and THEY bailed the banks, because THEY are the ones with a lot of money inside those banks.
  
  The next bailout better be paid in advance by those who caused it, hence a tax on gambling with stocks.
  The next bailout will be paid by the government. And the people have no money, nor voice, nor power to stop that.
8. Re: Should be a tax on every transaction by Anonymous Coward · 2013-09-12 00:34 · Score: 0
  
  Far be it for me to inject reality into a Slashdot dicussion but there is a tax on transactions, that's where the SEC gets its funding.
  http://www.sec.gov/answers/sec31.htm
9. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 00:37 · Score: 0
  
  There are fees and emoluments charged per transaction. There is also brokerage fees; The brokers pay taxes as well.
10. Re:Should be a tax on every transaction by fuzzyfuzzyfungus · 2013-09-12 00:38 · Score: 5, Insightful
  
  Please, don't disparage the good folks in the probabilistic entertainment area of the hospitality sector by such comparisons.
  
  Casinos may be tacky; and they do suck some gambling addicts dry; but their danger to the larger economy, and to parties who don't choose to deal with them, is quite minimal. Even better, because of their tackiness and the widespread knowledge of how foolish it is to work with them when greater-than-recreational amounts of money are on the line, nobody proposes massive bailouts, or handing social security over to them to manage!
11. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 00:40 · Score: 0
  
  Every time I buy a stock or sell one, the IRS and other taxing authorities suck some money out of me
  You don't get taxed when you buy. You get taxed when you sell. The tax is on the appreciation of the principle, not the principle itself. It makes no sense to be taxed on a purchase, unless you are talking about a sales tax (which doesn't apply here).
12. Re:Should be a tax on every transaction by khallow · 2013-09-12 00:42 · Score: 4, Funny
  
  They don't have ESP, but they can see buy orders before they are executed.
  Then that's insider trading. The US has laws on the books for that.
13. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 00:42 · Score: 0
  
  There is. The "tax" is the price of a seat on the exchange. The trading houses buy stocks "wholesale" and sell them retail. Their seats are very expensive, so even when divided by their great volume, their is a real cost involved in transactions for them.
  No wholesaler pays (or charges) sales tax. Retailers do. In the stock market. an individual is a retail buyer, and the government treats him as such by taxing him.
14. Re: Should be a tax on every transaction by tolkienfan · 2013-09-12 00:46 · Score: 4, Informative
  
  I know of no pure HFT company that was bailed out. Some banks have HFT divisions, but that's incidental to their problems and eventual bailout.
15. Re: Should be a tax on every transaction by tolkienfan · 2013-09-12 00:47 · Score: 1
  
  They can see buys and sells on the book, as can everyong else.
  They cannot jump ahead of them. That's completely made up bullshit.
16. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 00:48 · Score: 0
  
  1776 is the solution to that little problem or just wait until they bankrupt the whole country and themselves
17. Re:Should be a tax on every transaction by smallfries · 2013-09-12 00:50 · Score: 2
  
  No, they don't. They don't have ESP. They can't see what you do on a market before you actually do something on the market.
  That's a bit of a silly thing to say, unless you actually believe that ESP would be necessary to see what is about to happen in a market. I don't know if you've given any real thought to this at all: but before a buyer and a seller can meet to make a trade they both need to signal that they have the intention to do so.
  
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18. Re: Should be a tax on every transaction by tolkienfan · 2013-09-12 00:50 · Score: 1
  
  You could trade directly on the exchange too.
  How is it unfair when you choose to go thru a broker?
19. Re:Should be a tax on every transaction by khallow · 2013-09-12 00:59 · Score: 1
  
  unless you actually believe that ESP would be necessary to see what is about to happen in a market
  Yep. When you're trying to predict someone's actions without some sort of information on what they're going to trade, then it is ESP.
  
  I don't know if you've given any real thought to this at all: but before a buyer and a seller can meet to make a trade they both need to signal that they have the intention to do so.
  Yea, that was done when the buyers and sellers got access to the stock market, which could have been years ago. There's no magic signal of intent to trade before an order is placed.
20. Re:Should be a tax on every transaction by Drewdad · 2013-09-12 00:59 · Score: 1
  
  I think there's already a "pay to play" feature in place, which is that the clearing house charges folks for making trades. The algorithms already have this built in to their models, so increasing the transaction price might create a little friction, but it's not going to stop people from writing software that tries to make money on the stock market. https://usequities.nyx.com/markets/nyse-equities/trading-fees
21. Re:Should be a tax on every transaction by Xest · 2013-09-12 01:00 · Score: 2, Informative
  
  "Why? No one has explained why anything needs to be done at all. It's all "rich people are making money therefore we need to screw it up for them"."
  So your view is that people should be able to make money no matter what the cost and that making money is the single key thing that should come above all else?
  How far are you willing to back that argument? At one extreme, if a military commander manages to pull of a bloody coup in the US and seizes the money of all the bankers and uses his new found power to retroactively making everything he did legal then is that okay?
  Where exactly do you draw the line as to what is and isn't okay in terms of the ability to make money regardless of the side effects or do you feel there are no limits and the ability to make money is the single most important pinnacle of human achievement and attainment?
  The problem with your argument is that most people would argue the line is drawn at the point where such money making schemes cause a crash and require a tax payer bailout because at that point it's no longer simply a case of free market economics and survival of the fittest, it's an artificially supported industry and free market libertarianism has already long gone out the window. Had things been left to free market economics the companies doing the current trading would've had to declare bankruptcy and would not now even exist.
  HFT has a real impact on world economies and often unpredictably so. The more enlightened argument is that it's probably not smart to create such unpredictable chaotic systems and give them a direct feed into national and global economies where consequences range from some average Joe losing his job and house, all the way through to wider economic strife creating heightened conditions for things like riots and war where real actual lives are lost.
  To turn the argument around, why do you think this sort of system should've been allowed in the first place? What do you consider to be the benefits?
  "And why is that considered a good thing? I think we need more chatter and computer predation."
  What makes you say this? Is there some evidence that this would increase market stability or something or were you just disagreeing with the GP for the classic online purpose of protecting your digital manhood by refusing to cede a single point without any consideration as to whether your disagreement has any merit, or in fact any meaning? I think you need to expand on this point and explain why you think increase chatter and predation is a good thing rather than just say you support it with no explanation.
  "They can't see what you do on a market before you actually do something on the market."
  That's the whole point of predictive algorithms used in the financial sector, they're designed to do exactly that - predict with a high degree of accuracy what manual traders are going to do based on nanosecond by nanosecond evaluation of the market and trends (something no human can do that fast), and then beat them to the punch.
22. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 01:09 · Score: 1
  
  They're not doing anything useful for society! They create nothing, yet profit. They can do this because of how the rules are set up. Why can't we change the rules?
  The current system gives an unfair trading advantage to those with resources (companies who can have fast data links from the Chicago commodities markets to the NYC stock markets). This isn't fair to everyone else, and since we live in a democracy, and there is no constitutional right to pure capitalism, we don't have to put up with it if we don't want to. So, why should I vote for politicians that don't want to change the rules. How does this benefit me? Make your case.
23. Re:Should be a tax on every transaction by ggraham412 · 2013-09-12 01:10 · Score: 1
  
  Every time I buy a stock or sell one, the IRS and other taxing authorities suck some money out of me. When these computers buy and sell shares several times a second, they do not get taxed. That is not fair. There should be a tax maybe .001 cents per transaction.
  No they don't. The IRS only takes a bite if you make a profit buying or selling stock. It is called capital gains tax. What you may be thinking of is the fee that your brokerage charges for making a transaction.
  Professional trading firms also get charged fees by whatever exchange they are trading on, charged per transaction, and they get taxed on any profits generated. Just like you!
24. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 01:11 · Score: 0
  
  Some of these systems see what slow dim you are going to buy, jump ahead of you in line, buy it and then sell it to you.
  IANARST*, but is there a way to not buy it at the higher price? Stick them with the stock a few (million) times, maybe they'll move to a less offensive strategy.
  *I am not a robot stock trader
25. Re:Should be a tax on every transaction by b4upoo · 2013-09-12 01:12 · Score: 1
  
  Software designed to predict movements in a stock surely exists. The degree of predictability surely is not absolute but in the short term it is obviously good enough to earn a profit or it would not be in use.
26. Re:Should be a tax on every transaction by bmxeroh · 2013-09-12 01:12 · Score: 3, Interesting
  
  No, what the poster above is referring to is a form of arbitrage. Admittedly, it doesn't sound like the average person is affected by this so much as large block orders placed by big companies, but it absolutely happens. The issue is that these very large orders take a significant amount of time to complete, and the HFT algos have plenty of time to see what is happening, buy up a position and sell it as the price is going up due to the large purchase. It's not about large profits, remember this is High Frequency Trading, so all they have to do is take advantage of very small price differences a gazillion times a day to turn a hefty profit.
  
  --
  Central Ohio Home Theater Installation - The Theater People
27. Re: Should be a tax on every transaction by Anonymous Coward · 2013-09-12 01:12 · Score: 0
  
  Average Joe can't afford to rent out the floor just below the commodity market, and pay for a laser connection to NYC.
28. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 01:14 · Score: 5, Interesting
  
  No, they don't. They don't have ESP. They can't see what you do on a market before you actually do something on the market.
  Actually they do have esp.
  They can see what order you have placed before it is fulfilled.
  Have you not heard of level 2 market data.
  Pay for it and you can see what orders are placed - volume, bid/ask price, trading organisation.
  Combine that with super high speed connections to the exchange and you can see transactions at the millisecond and act on them.
  Off topic:
  If you've ever traded you may have spotted the effects of high frequency when using candlestick charts at the 1 minute timeframe.
  You will see long repeated sequences of Bull Candle, Bear Candle of the same size over a short time scale (seconds)
  Thats proof of Banks and institutional traders bots / algorithms fighting for price power.
  8 Years ago you would be lucky to have spotted a dozen a year.
  Nowadays there's one everyday if you know which instrument to look at.
29. Re:Should be a tax on every transaction by fredprado · 2013-09-12 01:19 · Score: 1
  
  That is not what he said. What he said is that when all you have to say against something is that it is bad because the rich are making money you have no argument.
  
  The rest of your argument is just a bunch of suppositions without any real data to substantiate. Nobody was able to prove that HFT is more dangerous than normal trading or that it has any adverse effects on the economy. There is even analysts who defend that HFT have a very positive effect in the economy by adding liquidity to the market.
30. Re:Should be a tax on every transaction by rwv · 2013-09-12 01:25 · Score: 1
  
  There should be a tax maybe .001 cents per transaction.
  Why? No one has explained why anything needs to be done at all. It's all "rich people are making money therefore we need to screw it up for them".
  Usage taxes are very common. Many jurisdictions have toll roads and parking meters for collecting funds when users elect to use those public resources. Congress controls interstate commerce within which these equity markets are classified and holds the rights to act when members of the public are misusing a market. I can't say whether I believe that trading algorithms are misusing the market, but it would be completely rational for Congress to institute a usage tax on equity market transactions if they felt misuse was occurring.
  Fact is... though... that small usage taxes would be cost of doing business for successful trading algorithms and would cost regular users more money (theoretically lower profits, in both cases).... so Congress shouldn't rush into any decision to change the current system.
31. Re: Should be a tax on every transaction by bmxeroh · 2013-09-12 01:26 · Score: 2
  
  I'm going to play devils advocate here for a minute. You are right that everyone can see the buy and sell orders. The key is that in extremely high frequency trading, they can REACT to these buy and sell orders faster than anyone else. So I can see it being somewhat possible. Consider the following scenario. There are 10 sell orders for $10 dollars, and 10 buy orders for market price. It takes a minute for a buyer to be matched up with a seller organically, and in the meantime the HFT algos buy up all of the $10 sell positions and immediately put new sell orders out for $10.50. Now the original buyer purchases those stocks for $10.50 rather than $10, the original sellers got what they wanted, the HFT guys made money, and the person that wasn't smart enough to set a limit order got screwed 50 cents a share and doesn't know the difference.
  
  Admittedly, I'm talking out of my ass hence the devils advocate qualifier, but these are very, very large markets with lots of players and lots of middle-men so I could see plenty of room for this to happen on this level. I already made note of this happening (and is known to happen for real) on very large orders being placed by investment firms, so I don't see why it couldn't happen with smaller orders if they are fast enough. In reality, it's just simply arbitrage.
  
  --
  Central Ohio Home Theater Installation - The Theater People
32. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 01:26 · Score: 0
  
  let them have their little HT electronic gimzos but if they are willing to take the advantage then let let them take the risk. All transactions made are final even if the code is misbehaving.
  No do overs. If this means you go bust at the end of the day so be it its the consequence of your action.
33. Re:Should be a tax on every transaction by miller39 · 2013-09-12 01:26 · Score: 1
  
  Every time I buy a stock or sell one, the IRS and other taxing authorities suck some money out of me. When these computers buy and sell shares several times a second, they do not get taxed. That is not fair.
  I'm pretty sure the IRS gets their cut too. But they get a cut of profits just like they do of your profits.
  
  There should be a tax maybe .001 cents per transaction.
  Why? No one has explained why anything needs to be done at all. It's all "rich people are making money therefore we need to screw it up for them".
  
  That would cut the amount of chatter and computer predation.
  And why is that considered a good thing? I think we need more chatter and computer predation.
  
  Some of these systems see what slow dim you are going to buy, jump ahead of you in line, buy it and then sell it to you.
  No, they don't. They don't have ESP. They can't see what you do on a market before you actually do something on the market.
  All good points. These algorithms are implemented to exploit market inefficiencies for financial gain. That is a good thing because they destroy these inefficiencies as they the market creates them, thus leaving a more efficient market. Sometimes someone makes a lot of money doing it. Sometimes they lose their shirt. But it's their money and they are providing a service. Fewer market inefficiencies means a more stable market for everyone.
34. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 01:29 · Score: 0
  
  1776 when you chose to replace your noble elite with another kind of noble who was just better at Gun running, slave trading, smuggling, land grabbing and genocide than the English.
  2013 nothings changed they still rule whilst you pretend your a gazillioniare in the making,
35. Re:Should be a tax on every transaction by khallow · 2013-09-12 01:31 · Score: 1
  
  So your view is that people should be able to make money no matter what the cost and that making money is the single key thing that should come above all else?
  Yet again, the irrational bullshit comes out. Note I said "why anything needs to be done". What makes you think that I wouldn't have considered high "cost" a valid reason?
  
  To turn the argument around, why do you think this sort of system should've been allowed in the first place?
  A good question and here's some answers. First, the US is something of a democracy. That means people should be free to act in the absence of the above harm you speak of. So IF the activity doesn't harm someone, then a free country wouldn't ban the activity, be it gay marriage or some hypothetical harmless version of high frequency trading.
  
  Second, it is foolish to ignore the benefit of an activity just because it doesn't directly benefit you. As I've noted before, fast trading generates liquidity in a market, quickens market response to new information, and funds some cool technology development that can be used for other things than just trading stocks. This activity also tests all those other computer trading programs out there, leading to better trading programs overall.
  
  It's just a niche, but in turn the benefits of improving that niche flow to other sectors of the economy and eventually to you.
  
  Third, the harm of fast trading is greatly overstated. Virtually every ill I've seen claimed of it is due either to unrelated policies (like too big to fail, insider trading, order fronting, "corporations", etc) or imaginary (the program figures out via ESP what you're going to do before you do it and then fronts your 100 share trade - griefing the markets!).
36. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 01:33 · Score: 0
  
  Sorry, but the AC is right. The stock market is rotted to its core. You are supposed to buy stocks in companies that you either think are profitable or are creating something that you believe might become profitable in the future. You are not supposed to buy/sell stocks like you are at a casino. I also think that there should be rules that you can't sell a stock that you have bought until after some time, but that might just bring additional problems...
37. Re:Should be a tax on every transaction by khallow · 2013-09-12 01:36 · Score: 3, Insightful
  
  As long as there's risk, it's not arbitrage. A small risk over thousands or more orders can become a big risk. And the AC didn't say "big orders". And even a human market maker can move fast enough to exploit big order trading. That was as I see it one of the big reasons why some people could make money at day trading, for example.
38. Re: Should be a tax on every transaction by khallow · 2013-09-12 01:39 · Score: 1
  
  There are 10 sell orders for $10 dollars, and 10 buy orders for market price. It takes a minute for a buyer to be matched up with a seller organically, and in the meantime the HFT algos buy up all of the $10 sell positions and immediately put new sell orders out for $10.50.
  Doesn't work that way. The HFT order would be put on the queue and the above transactions would clear up first since they're ahead of it on the queue. Now if you're speaking of two different markets, a human paper-waving market and a computer trading market, then that's arbitrage between the two markets.
39. Re:Should be a tax on every transaction by jbengt · 2013-09-12 01:40 · Score: 1
  
  . . . before a buyer and a seller can meet to make a trade they both need to signal that they have the intention to do so.
  
  . . . There's no magic signal of intent to trade before an order is placed.
  I believe you are wrong. For a seller to sell, they first have to offer stock for sale at a price; for a buyer to buy, they first have to offer to buy stock at a price (or at least one of those has to happen). If they don't agree on the price, there is no sale, but there is a signal of intent that "everyone" can see ("everyone" being those that are fast enough).
40. Re:Should be a tax on every transaction by Xest · 2013-09-12 01:40 · Score: 1
  
  "That is not what he said. What he said is that when all you have to say against something is that it is bad because the rich are making money you have no argument. "
  But no one said that. That was speculation on his behalf as to people's distaste for it. You can't say someone has no argument based on a certain opinion if they never actually expressed that opinion.
  "The rest of your argument is just a bunch of suppositions without any real data to substantiate."
  Actually most of my argument was simply a series of questions posing that exact point back at GP - that you can't make assertions without backing up your claim.
  "There is even analysts who defend that HFT have a very positive effect in the economy by adding liquidity to the market."
  Right and there are others that claim that opposite. That's exactly the point. I was posing counter-arguments to his assertions which he seemed to be implying were fact without making any effort to back up his claim, merely dismiss everyone elses based on things they hadn't even said.
41. Re:Should be a tax on every transaction by khallow · 2013-09-12 01:42 · Score: 1
  
  They can see what order you have placed before it is fulfilled.
  But they can't beat you to the market. They can't insert their order ahead of yours on the order queue without it becoming insider trading or a case of ESP.
42. Re:Should be a tax on every transaction by khallow · 2013-09-12 01:46 · Score: 1
  
  Usage taxes are very common.
  The government isn't providing anything per "use" of the stock market. So that rationalization doesn't soar.
  
  I can't say whether I believe that trading algorithms are misusing the market, but it would be completely rational for Congress to institute a usage tax on equity market transactions if they felt misuse was occurring.
  Congress "feels" all sorts of things, many which are purely imaginary or feigned. I propose a much higher standard - actual documented harm rather than what the local crazy man convention decided to do that day.
43. Re:Should be a tax on every transaction by Xest · 2013-09-12 01:47 · Score: 0
  
  "Yet again, the irrational bullshit comes out. Note I said "why anything needs to be done". What makes you think that I wouldn't have considered high "cost" a valid reason?"
  Well there's already been a high cost, the financial crisis in large part. As you're defending the status quo it's not unreasonable to assume that you support the status quo regardless of the cost. Or are you simply saying the cost of the financial crisis was an acceptable cost? If so then that was kind of the point of my question - where do you draw the line? When is the cost too high in your opinion?
  For what it's worth I appreciate the rest of your response because you've now taken the time to justify your opinion. I wont say I necessarily agree with all of it (but then I don't disagree with all of it either) but that was fundamentally the issue I took with your previous post - you were making short sharp dismissive claims without providing justification for them, so thank you for now providing a bit more depth to your argument, I think you raise some valid points, particularly that some of the biggest issues attributed to HFT actually stem from poor policy elsewhere.
44. Re:Should be a tax on every transaction by lxs · 2013-09-12 01:47 · Score: 5, Funny
  
  Being European, I prefer 1789. Off with their heads!
45. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 01:56 · Score: 0
  
  Supposed to? SUPPOSED to?
  Fuck right off. Not everyone agrees with your delusions.
46. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 02:02 · Score: 0
  
  They create nothing, yet profit
  Like most home owners?
47. Re:Should be a tax on every transaction by fredprado · 2013-09-12 02:08 · Score: 1
  
  But no one said that. That was speculation on his behalf as to people's distaste for it. You can't say someone has no argument based on a certain opinion if they never actually expressed that opinion.
  This speculation is substantiated by your complete lack of objective reasons to forbid it and your wish to do so even then.
  
  Furthermore you are doing exactly what you are criticizing on him. This assertion you made is not backed by anything, for example:
  
  HFT has a real impact on world economies and often unpredictably so.
  
  Your whole point is that things should be forbidden unless proven useful. That is ridiculous and undesirable in a free society. In a free society things should only be forbidden when they are proven harmful, which is not the case with HFT.
48. Re:Should be a tax on every transaction by the+eric+conspiracy · 2013-09-12 02:14 · Score: 1
  
  Taxing transactions is one of the most moronic ideas in human history. Financial markets are fungible and global beyond almost anything else. All it will take is one country looking to add to it's GNP and ALL markets will move there.
  France has been pushing this. If they ever implement it will provide an interesting object lesson in dumb.
  Ultimately the fact is that HFT is self-defeating. Once you implement it competition between the robots will eventually eliminate all financial gain through HFT. It's already happened to a large extent.
  http://www.businessweek.com/articles/2013-06-06/how-the-robots-lost-high-frequency-tradings-rise-and-fall
49. Re:Should be a tax on every transaction by smallfries · 2013-09-12 02:16 · Score: 1
  
  You seem to be content to argue from a position of ignorance. Maybe if you started with a very basic description you would learn the difference between an offer and the execution of an order. I'm sure that you would be capable of understanding if you tried.
  
  --
  Slashdot: where don knuth is an idiot because he cant grasp the awesome power of php
50. Re: Should be a tax on every transaction by Anonymous Coward · 2013-09-12 02:30 · Score: 2, Informative
  
  Saly, you're wrong. They can. Say you have a bid at $10.00 and the spread is $0.01. You're on top of the order book right? Nobody can step in front unless they actually buy the ask lot, 'cause the pricing granularity is $0.01. Bzzzzzzt! Wrong. HFT shops have (among others) an exception and can bid in increments of 0$.0001 to *ahem* provide liquidity. So an algo can (and likely will, if needed) step in front of you at $10.0001. Suddenly, gaming the system just got a fraction of a cent easier.
51. Re: Should be a tax on every transaction by tolkienfan · 2013-09-12 02:30 · Score: 1
  
  You're saying someone buys them at the asking rate and sells them at a higher price? I don't see anything wrong with that.
  Are you saying it's bad simply because it's an algo?
52. Re: Should be a tax on every transaction by GameboyRMH · 2013-09-12 02:33 · Score: 1
  
  But you could in theory if you were rich and that's good enough for a capitalist society! Everything is A-OK if a rich man or the Unabomber wouldn't be inconvenienced by it.
  
  --
  "When information is power, privacy is freedom" - Jah-Wren Ryel
53. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 02:39 · Score: 1
  
  You are actually wrong about them not having ESP. It's good enough that they see you before "the market" sees you. Those robots provide nothing. Because the said robots can't lose, I, among many, won't invest in stock markets. That is a clear downside. If the robots go mad and lose big time the exchange will just negate all trades, and give the money back to the robots. THAT is not fair. If you give your money to a robot you lose them if the robot fails, as it should be. Because it dosen't work like that the game is rigged, and there is no point in playing. (this only applies to short time stock playing offcourse, if you invest in terms of years it doesn't matter). Stock market should only "tick" every 10 seconds or so. It's volatile enough for any human, and would make it easier for the markets computers. No company value is going to need better resolution than 10 seconds.
54. Re:Should be a tax on every transaction by Phrogman · 2013-09-12 02:40 · Score: 1
  
  Do realize just how much money it would take to finance another revolution successfully? Why you'd probably have to get corporate sponsorship, oh wait...
  The revolution will be monetized! :P
  I know! Kickstarter...
  
  --
  "The first time I got drunk, I got married. The second time I bought a chimpanzee, after that I stayed sober" Arian Seid
55. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 02:41 · Score: 0
  
  Citation needed...
  
  When France introduced one
  When has that ever happened? As far as I can remember, this has always been a subject of discussion, never implemented.
56. Re: Should be a tax on every transaction by bmxeroh · 2013-09-12 02:42 · Score: 1
  
  That makes sense, I was more trying to posit a "what-if" more than anything, the whole system is more complicated than my limited understanding. Truth be told, I think this is more of a perception issue. Because of the efficiency and speed of these algos and a general misunderstanding of how it all works due to the extreme complexity of it all, it certainly appears at first glance there is some cheating going on somewhere. This perception of course is not helped when someone actually is caught cheating or doing something shady. The only thing that really worries me about HFT is that it seems like when it goes wrong, it goes very wrong and has a broad effect on the market.
  
  --
  Central Ohio Home Theater Installation - The Theater People
57. Re:Should be a tax on every transaction by kajsocc · 2013-09-12 02:46 · Score: 1
  
  before a buyer and a seller can meet to make a trade they both need to signal that they have the intention to do so.
  True, but any electronic securities exchange won't tell anyone you've put in an order to buy or sell at an available market price until it actually executes your order. Doing otherwise would be highly fraudulent. Therefore, a bot can't tell unless it has some predictive capabilities... more likely probability and statistics than ESP, realistically speaking, but using probability carries with it the risk that it'll be wrong.
58. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 02:46 · Score: 0
  
  Some people make money day trading because they are lucky. At that level the stock price movements are more or less random. So it almost becomes a zerosum game. Even more so with short positions. Some win, others lose. You are going to find one that made a fortune, and several that lost theirs.
59. Re:Should be a tax on every transaction by Scooter_Libby · 2013-09-12 02:51 · Score: 1
  
  Please realize that the SEC levies a tax on every transaction (buy and sell) http://www.sec.gov/News/PressRelease/Detail/PressRelease/1365171514024#.UjHRW6BTO5M
  
  Also the market has a fee structure that charges if one take liquidity (order execute immediately and takes an order off the book) and gives a rebate on orders that provide liquidity (order remains on book for some period of time). http://www.nasdaqtrader.com/trader.aspx?id=pricelisttrading2
  
  In my opinion a better solution is for the market to increase the minimum latency for a transaction. For example, every second all the orders sent to the exchange are reconciled and the results sent to the originators of the orders, as well as the updating all public data like national best bid, best ask prices. This would almost completely neuter very high speed trading engines, as their data and updates on filled orders would be the same as everyone else, viz. 1 second. Note, the 1 second is an arbitrary amount of time, but I would fix it to be several times a minute, but no faster than 500 ms.
60. Re: Should be a tax on every transaction by Anonymous Coward · 2013-09-12 02:54 · Score: 0
  
  Strong reactions are inspired by fear.
  Whatcha afraid of? The truth? Not gonna be able to buy that new sportscar because you can't speculate anymore?
  Be afraid, fucker.
61. Re:Should be a tax on every transaction by Xest · 2013-09-12 02:55 · Score: 1
  
  "This speculation is substantiated by your complete lack of objective reasons to forbid it and your wish to do so even then. "
  I provided a reason, but it's not my fault you're not educated enough to understand that reason. If you don't understand why these sorts of systems are chaotic, why chaotic systems are unpredictable, and how a chaotic system with the ability to interact with and effect an important area of society could lead to potential harm then that's not my problem - you just need to go and learn a bit more before engaging in the topic. The worst part in this particular case is that there's even precedent, with the most recent prominent example being here:
  http://en.wikipedia.org/wiki/2010_Flash_Crash
  "Your whole point is that things should be forbidden unless proven useful."
  No, my point is that something that can many unforeseen impacts of a possibly massive extent should be better understood before being pushed into the wild.
  Presumably though you'd let GM crops and so forth into the wild without a thought, because "What could possibly go wrong, and why forbid it unless we can prove it's going to cause problems?" right?
  The very nature of chaotic systems is that they can lead to unforeseen results, the outcomes aren't predictable, and if the outcomes aren't predictable then there's an obvious risk in letting them lose on important areas of society.
  It's not a case of forbidden unless proven useful, it's a case of forbidden until proven harmless if there is potential for harm, which is quite different. In fact, this is the whole principal behind drug testing for example to ensure drugs are safe before they're authorised for human consumption rather than simply throwing any old concoction on the market without a care for the side effects. We're not talking about playing monopoly with monopoly money here, we're talking about the real economy.
62. Re:Should be a tax on every transaction by ultranova · 2013-09-12 02:56 · Score: 2, Insightful
  
  Why? No one has explained why anything needs to be done at all. It's all "rich people are making money therefore we need to screw it up for them".
  
  Money is a form of power. Letting the rich get richer without limit lets them concentrate power in their hands without limit. This, in turn, leads to a dictatorship: it's not exactly a secret that the Government does whatever it's corporate masters tell it to.
  Besides, stock market is a zero-sum game. It generates no value, therefore every single cent a HFT makes comes out of someone else's pocket. So if the rich get richer the poor get poorer and suffer needless economic hardship, all just a few people can live in a lap of luxury.
  It's about time to acknowledge that the 1% are waging a class war against the rest of humanity and start fighting back. Or at least I will; you, of course, are free to lick the boot that stomps on your face, if it makes you feel you're vicariously succesful.
  
  --
  Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
63. Re: Should be a tax on every transaction by bmxeroh · 2013-09-12 02:56 · Score: 1
  
  I'm not saying it's bad in any way. It's simple business. I also didn't mean for anyone to take the scenario above as real. I don't understand the inner workings of the current system, and I really doubt anyone fully does, but I was trying to paint a picture of how HFT could be used as sort of an invisible broker to siphon money off of a transaction that they otherwise wouldn't have been involved in, using their superior reaction time as an advantage. It wouldn't really be wrong per se, and in that case no one would really realize they paid more than they should/could have, but it maybe comes off as a little shady to most people.
  
  --
  Central Ohio Home Theater Installation - The Theater People
64. Re:Should be a tax on every transaction by kajsocc · 2013-09-12 03:05 · Score: 1
  
  They can see what order you have placed before it is fulfilled. Have you not heard of level 2 market data.
  
  Combine that with super high speed connections to the exchange and you can see transactions at the millisecond and act on them.
  This is highly misleading. Level 2 market data is real-time offers to transact, not actual incoming transactions. GP was talking about knowing about what transactions are going to happen before they actually happen.
  
  If you're worried about people adjusting their selling prices in response to your buy offer, you can always just buy at their prices immediately, rather than putting up an offer for a bit less.
65. Re:Should be a tax on every transaction by ultranova · 2013-09-12 03:08 · Score: 2
  
  Then that's insider trading. The US has laws on the books for that.
  
  I love how this got modded +4 Funny.
  
  --
  Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
66. Re:Should be a tax on every transaction by Araes · 2013-09-12 03:12 · Score: 2
  
  Yes they can, and yes they do. Front running (or things that look suspiciously like it) happen constantly on the electronic exchanges. Flash trading is a form of trading in which certain market participants are allowed to see incoming orders to buy or sell securities very slightly earlier than the general market participants, typically 30 milliseconds, in exchange for a fee. This feature was introduced to allow participants like market makers the opportunity to meet or improve on the National best bid and offer price to ensure incoming orders were matched at the most advantageous prices according to Regulation NMS. What this then leads to is millisecond front running where the traders see your order, adjust theirs to take best advantage of it, and by the time yours goes in, a portion of the profit has been leeched out. The Securities and Exchange Commission proposed banning the practice as part of regulatory reforms in the wake of the Financial crisis of 2007–2010, but the proposals have not been implemented.
67. Re:Should be a tax on every transaction by ShanghaiBill · 2013-09-12 03:15 · Score: 1
  
  Because we, the people, end up bailing out these irresponsible fuckers who have turned Wallstreet into a casino.
  Except the bailout that nothing whatsoever to do with HFT. It also had nothing to do with Wall Street being a "casino". In fact, it was the exact opposite. The banks underestimated the systemic (non-random) risk.
68. Re:Should be a tax on every transaction by Paradise+Pete · 2013-09-12 03:23 · Score: 1
  
  you can always just buy at their prices immediately, rather than putting up an offer for a bit less.
  If I simply take the bid or offer I pay a significantly higher commission than if I put in my own. And of course I'm also taking a slightly worse price.
69. Re:Should be a tax on every transaction by Paradise+Pete · 2013-09-12 03:30 · Score: 1
  
  "Trading Positions" are taxed on their unrealized loss at the end of every year.
  They are? Under what circumstances? It's certainly not normal.
70. Re:Should be a tax on every transaction by pnutjam · 2013-09-12 03:33 · Score: 1
  
  A home is a place for me to raise my family, or store myself while I am not working. I don't see the comparison.
  
  --
  Cheap storage VM.
71. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 03:37 · Score: 0
  
  The people pay for the bailout. The government has no money but ours. Your notion of bailing out is like saying Louis the 14th built the Palace of Versailles. No, the people built Versailles and paid for it. The King just decided that they had to do it.
72. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 03:49 · Score: 0
  
  There's no need for a tax...that's a very crude way to handle the problem and it skims money out of the market, albeit not much. The solution to HFT would be to disallow canceling orders for a certain period of time (5 seconds or so). An offer to buy or sell stock should also be binding once another party has responded to it.
73. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 03:56 · Score: 0
  
  If you obviously have no idea how this works, why are you posting here?
  They may as well have ESP. They see your order in the queue, then put their order in FIRST pushing your order back in the queue, taking some of your profits when they then trade with you.
74. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 04:02 · Score: 0
  
  Yes they can do exactly that.
  They can spam the market with a range of orders and then have special rights to cancell all the orders but the one they want to let through. The one that just beat your price by a very small fraction.
75. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 04:03 · Score: 0
  
  Yes; and if you place an offer to sell at a particular price (or a bid to buy), and your price is hit, why would you care whether it was hit by an algo or by a human trader? You got what you wanted.
76. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 04:07 · Score: 0
  
  The financial crisis wasn't caused by HFT.
77. Re:Should be a tax on every transaction by Maxo-Texas · 2013-09-12 04:12 · Score: 1
  
  Actually they can.
  What they are doing would be called illegal front running if it were being done by humans at human speed.
  By placing themselves next to the market, they see your incoming stock- buy the stock cheaper- and then sell it to you at a markup (very tiny but still, your "market price order" ends up being filled at a higher price and you lost money). I'm surprised you are unaware of it, the practice has been widely reported.
  As I said, it's ILLEGAL when humans do this.
  Some of the ways they manipulate the markets are also illegal to close to illegal when done by human beings. I also support an order cancellation fee of 1 penny per cancelled order.
  I disagree with cancelling trades for algos when they screw up. If they buy a stock for too high or sell a stock for too low, they should have to eat it.
  I don't think the algos have much effect on investors and traders who trade for periods over 4 weeks. The cycles they create are very similar to humans. I'm retired and I made more than I spent this month.
  The biggest challenge for me is when the government changes the ground rules (like when they changed the accounting rules in march 2009 so banks could hold nonperforming loans on their books at full face value). Still- now I sort of expect the government to mess with the market.
  Expecting a drop to as far as dow 8000 in 2 years- but first three to six more months upward and sideways. Going to be the investment opportunity of a lifetime.
  
  --
  She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
78. Re:Should be a tax on every transaction by Maxo-Texas · 2013-09-12 04:14 · Score: 1
  
  Well yes, but what are your stretch goals going to be?
  A worker's paradise?
  A chicken in every pot?
  
  --
  She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
79. Re: Should be a tax on every transaction by Maxo-Texas · 2013-09-12 04:19 · Score: 2
  
  Hi Bmxeroh:
  It's real and here is just one of many links you can find on it when you google it.
  It is starting to be addressed (this is from May of 2012) but it's not fixed yet. It was still happening earlier this year.
  http://www.securitiestechnologymonitor.com/blogs/uptick-automated-front-running-exception-30852-1.html?sifma=tech
  Quote:
  One involves the original large block electronic trading outlet, Institutional Networks Corporation aka Instinet, and what happened when it opened up its order flow to automated traders.
  "The institutional clients complained immediately. If an institutional client places a bid to buy 5,000 shares at 24 1/8, the automated trading firms instantly placed a bid for a few hundred shares at 1/64 higher. They did this with every stock. If the institutional clients canceled their bids, the automated traders canceled their higher bids as well."
  That is found on Location 404 of 5286 on the Kindle edition of âoeBroken Markets,â(TM)â(TM)by Sal Arnuk and Joe Saluzzi. They are partners, co-founders and co-heads of equity trading of Themis Trading LLC, an agency broker that trades for institutional money managers and hedge funds.
  (deletia)
  Front running is the illegal practice of a stock broker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers.
  Interestingly enough, the Securities and Exchange Commission on May 30 filed a notice that the broker overseer, the Financial Industry Regulatory Authority, wanted to amend its front-running rulebook, to cover front-running of block transactions.
  
  --
  She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
80. Re:Should be a tax on every transaction by kajsocc · 2013-09-12 04:29 · Score: 1
  
  If you pay a higher commission for market taking than for market making, it's either the exchange charging you, or your broker. If it's the exchange, then the market makers can afford to give you better bids/offers in compensation for the smaller fee they have to pay. If it's your broker, get a better broker. They shouldn't be doing that.
  
  As for the slightly worse price, you're absolutely right. Many are willing to pay that spread because it is so small these days. The enhanced competition forces those prices to not be much worse than making your own offer, but there's only so much risk the other market participants are willing to take on at any one time.
81. Re:Should be a tax on every transaction by Gilmoure · 2013-09-12 04:42 · Score: 2
  
  Pot in every chicken?
  
  --
  I drank what? -- Socrates
82. Re:Should be a tax on every transaction by kajsocc · 2013-09-12 04:49 · Score: 1
  
  they see your incoming stock- buy the stock cheaper- and then sell it to you at a markup
  They cannot see your incoming market order before it actually executes. They can see your incoming limit order when you put it up, just like anyone else with access to level 2 market data. But your limit order is just an offer, not a demand to buy/sell at the currently available prices.
  
  With a limit order, all they can do is outbid you. That's completely legal; it is not front-running. It is no different than someone outbidding you in an auction.
  
  Front-running is when you, as a stock investor, want to buy a stock, and your broker buys some of the stock first, then buys some for you. Buying the stock increases the price as the lowest offers are removed. Since your broker bought first, you're getting a worse price on your stuff. Then the broker turns around and sells the stuff he bought at the new, higher price. This is fraudulent and illegal.
  
  As I said, it's ILLEGAL when humans do this.
  It's illegal for anyone to do this, robot or human.
  
  I disagree with cancelling trades for algos when they screw up. If they buy a stock for too high or sell a stock for too low, they should have to eat it.
  I completely agree.
83. Re:Should be a tax on every transaction by alexander_686 · 2013-09-12 04:58 · Score: 1
  
  It depends what you mean by “normal”. There rules are normal for people who trade heavily. Most day traders fall under these rules. I have seen a few – and I mean less than a dozen individuals - trip up and trigger these.
  These rules fall under the “constructive sale” rules.
  http://www.irs.gov/publications/p550/ch04.html#en_US_2012_publink100010758
84. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 05:22 · Score: 0
  
  No, they don't. They don't have ESP. They can't see what you do on a market before you actually do something on the market.
  How can you be so sure?
85. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 05:24 · Score: 0
  
  Besides, stock market is a zero-sum game. It generates no value
  I know why you say this and I understand that you can define a world view where this is true, but there's a reason we have a stock market and there's a value it gives. The stock market decides which companies get capital to expand their businesses. If the market is functioning well (debatable at most times), then capital is sent where it will create the most value. Because of the market, more capital is sent to better places and more value is created. That's the sole reason these markets are even tolerated. When they lose sight of that, they should be punished. They are not supposed to be legal casinos or protection rackets.
86. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 05:28 · Score: 0
  
  You really think so, don't you?
  How naive.
  Of course their orders are faster and able to predict a good trade well before you and other marks makde their trade. Remember you are slow as molasses, while they operate in ns. Each and every transaction is id'ed against a unique number per account. It's all probabilities on a mass-scale, but it IS ESP.
  It is no coincidence most market crashes are preceded by unprecedented longs from retailers and massive sellouts by the big commercials and most professionals.
87. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 06:13 · Score: 0
  
  you can quite easily see the bid and ask prices for the various exchanges for a particular security. you can also see the volume of bids at each bid/ask price that are waiting to execute
88. Re:Should be a tax on every transaction by prop_trader · 2013-09-12 06:31 · Score: 1
  
  Level2 Market data does not disseminate all quotes. It disseminates the quotes from market makers and other exchanges. The full order book is a separate feed. If you submit a market order from a retail broker it will never see a stock exchange. It will be internalized and crossed with either other customer flow or by the broker directly. If not it will be sent to a market maker like Knight or Citadel. The same will happen to a marketable limit order. The only way you will ever see a stock exchange is if you post something that will be entered into the order book. And there is no way for someone to "jump" you in line. Orders are fulfilled at each price level in the order that they were entered.
89. Re: Should be a tax on every transaction by Anonymous Coward · 2013-09-12 06:37 · Score: 0
  
  FWIW google for Goldman's latest "our algos quoted the wrong option prices so please roll back those trades that we lost about 100 millions on, k thx". Not really a public money bailout, but an interesting datum nonetheless (they did get their money back, now please guess the odds of Joe Schmoe receiving the same treatment)
90. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 06:47 · Score: 0
  
  It had nothing to do with trading, period. It was a systemic failure of asset values that can be traced directly back to ratings agencies giving AAA ratings to securities that were deliberately crafted to be eventually worthless. Lots of people were at fault along the way, but none of the actions that caused the collapse were of the trading variety.
91. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 07:05 · Score: 0
  
  Where can I sign up to plug my algorithm directly into the market without having to pay $5+ per trade. Or is this one of those things where only the rich get to play?
  Explain to us why the wealth should get to control the financial system. The money is printed by the government so why can't we nationalize the banking system so it's controlled by the representatives of the people, rather than having congress be controlled by the banking system?
92. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 07:14 · Score: 0
  
  Fact is... though... that small usage taxes would be cost of doing business for successful trading algorithms and would cost regular users more money (theoretically lower profits, in both cases).... so Congress shouldn't rush into any decision to change the current system.
  Taxes don't raise consumer's cost unless the tax is greater than the current profit levels.
  Taxless world:
  If you are willing to buy from me for no more than $2, the price will be no less than $2.
  If my cost is $1 including ($0) tax, my profit is $1.
  Taxed world:
  If you are willing to buy from me for no more than $2, the price will be no less than $2.
  If my cost is $1.50 including ($0.50) tax, my profit is $0.50.
  The cost to you is the same. No matter how high taxes are, as long as profit is greater than 0, I'll do it.
  Deeper arguments require things like opportunity cost, market manipulation, etc, but in a truly free market economy, all profit (including opportunity costs, etc) is zero due to competition.
  If I have to pay $0.10 in tax, I still charge $2 - you
93. Re:Should be a tax on every transaction by RespekMyAthorati · 2013-09-12 07:22 · Score: 1
  
  Plus vast amounts of fraud.
94. Re: Should be a tax on every transaction by Rockoon · 2013-09-12 07:22 · Score: 3, Insightful
  
  To be quite complete, all trades happen at an agreed upon price and if the HFT algorithm is involved its because its got the current highest bid or lowest ask out there.
  
  You will notice that nobody ever has anything to say about this fact being somehow bad. The arguments, 'cept for one, is indeed a combinations of "its evil algorithms" hand waving and "its evil rich people" hand waving.
  
  The one valid argument is that the markets sometimes halt trading and undo previous orders, and since HFT's hit the scene its always been because of HFT's. The solution isnt to stop HFT trading... its to stop these do-overs that prevent algorithmic traders from taking very large losses: Market regulation has distorted the true risks. Restore the true risks and let the bad HFT's fail big once in awhile.
  
  Simple.
  
  --
  "His name was James Damore."
95. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 07:42 · Score: 0
  
  I propose a much higher standard - actual documented harm rather than what the local crazy man convention decided to do that day.
  That's just silly. I have never shot you in the face and done you harm. I demand documented proof that doing so be harmful before it be a crime or stoppable by the police. If, after I unload a shotgun into your face, you are documented as harmed, I would consent to that act being made illegal. But there should be no retroactive guilt or liability on my part, as there was no documented proof it was harmful before testing it.
96. Re: Should be a tax on every transaction by Anonymous Coward · 2013-09-12 07:52 · Score: 0
  
  You're saying someone buys them at the asking rate and sells them at a higher price? I don't see anything wrong with that.
  Are you saying it's bad simply because it's an algo?
  U offer to buy at limit 10,
  X offers to sell at limit 9.
  Z sees both first because of (jargon HFT), buys from X and sells to U.
  Z just stole a dollar's profits from the U-X transaction, risk free, specifically from U since if he didn't see your limit 10 offer. In all likelihood, Z sold it to you at 10 and THEN bought it from X at 9. When that breaks (X switches quickly to sell at 11 vs 10), the "freeze and reset" the market, rolling back the big players transactions. If you buy the wrong thing, good luck with that.
  THAT's why people get pissed.
97. Re:Should be a tax on every transaction by prop_trader · 2013-09-12 07:55 · Score: 1
  
  No they can't. If you had read the exchange specs you would know that Flash Orders were an optional feature to keep from getting routed out to the NBBO exchange. The person submitting the order had to opt in to have their order viewed. And in any case they no longer exist. http://online.wsj.com/article/SB10001424052748703409304576166930877474292.html
98. Re: Should be a tax on every transaction by bmxeroh · 2013-09-12 08:27 · Score: 1
  
  Thanks for the legwork on this. I think at this point, the entire thing is so hugely complex that no one, including the SEC, is fully aware of how it all works. This provides ample opportunity for nefarious yet highly intelligent people to work the system to their advantage. HFT has gotten a lot of heat lately, but I think it's mostly because of some of the recent flash crashes more than anything. Imagine what's happening on a smaller scale that doesn't cause the market to crash when it goes wrong. There are a lot of comments in this story that are defending the entire sector as if anyone that suggests something is awry is some conspiracy theorist nut job, but I feel like there is entirely too much money involved for it not to be infested with leeches and swindlers.
  
  --
  Central Ohio Home Theater Installation - The Theater People
99. Re: Should be a tax on every transaction by Anonymous Coward · 2013-09-12 09:08 · Score: 0
  
  Add to that the additional routing an order from a retail investor has to go through before it actually makes it into the books and the fees trading firms pay to have a direct line to the exchanges and you have a system where an firm can execute and fill several round-trip transactions in the time it takes your order to even appear.
100. Re:Should be a tax on every transaction by Danimoth · 2013-09-12 09:18 · Score: 1
  
  Actually, the SEC already takes .0000174% of every transaction from the seller. Section 31 "SEC Fees" are charged by exchanges to the broker-dealer who usually passes them along to their customer. The fees are small but can really add up on larger transactions. You just want to make the charge bigger.
  
  --
  No smoking sigs indoors.
101. Re:Should be a tax on every transaction by Chowderbags · 2013-09-12 09:22 · Score: 1
  
  Oddly enough, they can (in some systems). http://en.wikipedia.org/wiki/Flash_trading
102. Re:Should be a tax on every transaction by makomk · 2013-09-12 09:54 · Score: 1
  
  In practice, there's no such thing as risk-free arbitrage anyway though - there's always a small risk that one of the markets will shift before both sides of the transaction go through.
103. Re:Should be a tax on every transaction by khallow · 2013-09-12 12:08 · Score: 1
  
  Where can I sign up to plug my algorithm directly into the market without having to pay $5+ per trade. Or is this one of those things where only the rich get to play?
  Of course, it's pay 2 play. Why shouldn't it be?
  
  Explain to us why the wealth should get to control the financial system.
  Two reasons, it's mostly their money in play. And the ones running things tend to be competent.
  
  The money is printed by the government so why can't we nationalize the banking system so it's controlled by the representatives of the people, rather than having congress be controlled by the banking system?
  Because the representatives of the people fuck things up. I'd rather have a financial system that works because it's run by the people who already have the greatest interest in making sure that system works than a system that doesn't work because the representatives of the people broke it.
104. Re:Should be a tax on every transaction by khallow · 2013-09-12 12:18 · Score: 1
  
  Where's the evidence? I see a couple of people make unfounded claims. Sure, they are knowledgeable, but it remains that their words aren't backed by anything. OTOH, if I sniff someone's trade in the market queue and front that order before it can get to the market, then I'm insider trading. Last I checked, that's still illegal.
105. Re:Should be a tax on every transaction by khallow · 2013-09-12 12:50 · Score: 1
  
  If you read this entire thread, all rebuttals consist of two forms, first, an assertion without proof that things work the way that the original poster claimed with programs magically reading the transaction queue of the premier computerized stock markets and getting their orders out in front before a transaction can execute. The other is to claim, again without proof, that I'm ignorant of even the basics of how a market works. Both arguments are pretty stupid IMHO.
  
  The thing you apparently don't get is that on such computerized markets, an offer which would result in a transaction is immediately processed for transaction. There's no letting the offer sit on the market for a period of time, short or long, before the market decides to close the transaction. But there's many markets and offers often appear on different markets. Then middlemen (who can be owners of these markets) can close the trade and reap benefits much like what was described earlier in the thread. Or maybe they run their own black pool and have rigged trading in favor of themselves or important clients.
106. Re:Should be a tax on every transaction by khallow · 2013-09-12 12:58 · Score: 1
  
  And some people make (or perhaps "made" since the term has long been out of favor) money day trading because they actually earn a consistent net gain. There is some market advantage to being a market maker - by this I mean any trader who trades frequently on a stock without intent to own or invest in the stock (such as a day trader).
  
  For example, a market maker would quickly detect the entry of an unsubtle large buyer or seller (the "big order trading" I referred to), for example, which is valuable market information (it allows you to forecast short term price swings, for example).
107. Re:Should be a tax on every transaction by khallow · 2013-09-12 13:03 · Score: 1
  
  It's not a case of forbidden unless proven useful, it's a case of forbidden until proven harmless if there is potential for harm, which is quite different.
  The "case" would fail, if its criteria is used on itself. It's simply disastrous to prevent all human activity which can't be proven to be harmless.
108. Re:Should be a tax on every transaction by khallow · 2013-09-12 13:27 · Score: 1
  
  Well there's already been a high cost, the financial crisis in large part.
  As the other replier noted, the recent financial crisis was not caused by any sort of fast trading. Leverage is the tool of choice you should be looking at. Your assumptions are wrong. But there are plenty of people in this boat.
  
  What I think is dangerous is the tying of HFT and other market activities in erroneous ways to serious problems with financial markets and societies. I was thinking earlier today that what's really going on is that HFT (and related activities) puts stress on an economic system. If that system had systematic problems or faults, then it is possible that HFT can trigger a failure. But it's not by any means unique in this.
  
  Another such activity is free speech. It too can trigger failures (such as the revelation of gratuitous and illegal NSA spying has triggered a modest failure for US intelligence). We normally don't blame such failures on free speech. We don't say, for example, that free speech caused intelligence agencies to spy on their citizens. But that's no more erroneous than claiming that fast trading resulted in the 50 to 1 debt to assets ratio that caused the real estate crisis.
  
  The obvious two differences are that everyone generally benefits from free speech, while only an elite class of trader can benefit from fast trading and second, speech is easy to understand while fast trading is not. You open your mouth or type on the keyboard and you just did "speech". It takes a lot more work to succeed at fast trading.
109. Re:Should be a tax on every transaction by khallow · 2013-09-12 13:32 · Score: 1
  
  Ok. Note the prevalence of terms like "killed", "lying in a Dallas hospital", etc which show harm was incurred by being shot in the face.
  
  But there should be no retroactive guilt or liability on my part, as there was no documented proof it was harmful before testing it.
  Most countries don't make people criminals before they actually commit the crime in question. So this concern is probably trivially satisfied by whatever district you are in.
110. Re:Should be a tax on every transaction by khallow · 2013-09-12 13:50 · Score: 1
  
  Now this is bizarre. I make an analogy to free speech. Then lo and behold, a former US Department of Homeland Security official makes the case for me, abet with a different civil liberty. Privacy advocates are forcing the US Transportation Security Administration to conduct billions of intrusive searches every year. Obviously, relinquishing privacy is the only way to deal with an abusive instrument of the state.
111. Re:Should be a tax on every transaction by fredprado · 2013-09-12 16:01 · Score: 1
  
  The very nature of chaotic systems is that they can lead to unforeseen results
  You can't even prove it is a chaotic system at all. You can`t prove anything at all.
  
  It's not a case of forbidden unless proven useful, it's a case of forbidden until proven harmless
  Nothing can be proven to be harmless, and you still fail to bring any evidence at all that this is harmful, even the "Flash Crash" didn't do any real harm to the market. When you want to ban something just because you suspect it may be harmful without any evidence it is actually harmful you are just acting on prejudice.
112. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-12 18:06 · Score: 0
  
  Why should it be? Why should we privatize our monetary system? And if we do, why does that mean a bunch of fucks get to skim billions off our transactions for themselves? Why can't it be run as a non-profit?
113. Re:Should be a tax on every transaction by smallfries · 2013-09-12 18:31 · Score: 1
  
  Ok, so you seem to be more informed than I thought from your previous posts. In a market where the marketplace owner is a single central authority what you've said would hold about the privacy of bids / offers and instant settlement. But electronic traders are not working in those markets. For example, Nasdaq has distributed market making. The firms involved in trading are also making the market - this is a much closer model to a pre-electronic trading pit where the bids and offers were broadcast by shouting.
  The actors in trading are the actors involved in making the market, so the signals and intentions are effectively public: or at least they are public to all of the major players in the market. One of the key behaviours that has been discussed is bots that try to identify arbitrage opportunities by leaping in to close bids before other actors, then hold the asset for microseconds before selling it in different sized parcels at different prices. They provide liquidity at the expense of widening spreads for traders. In the terms that you are described it these are middlemen, but in the case of markets like nasdaq they are also participants.
  If this description does not convince you that the signals are public then I have a question for you: why do you think that firms pay so much to reduce latency to the exchange? Latency is only an issue in reaction times for deciding whether to trade or not, and the model that you've described so far with synchronous actions is non-interactive...
  
  --
  Slashdot: where don knuth is an idiot because he cant grasp the awesome power of php
114. Re:Should be a tax on every transaction by Xest · 2013-09-12 19:40 · Score: 1
  
  I should probably have quantified as it seems you've missed the point I intended - I'll quantify that as serious harm. I don't pretend anything that may cause the slightest bit of harm should be outlawed, but that anything with potential to cause serious harm should be treated with some degree of caution and confirmation before "going live" with it.
115. Re:Should be a tax on every transaction by Xest · 2013-09-12 19:42 · Score: 0
  
  "You can't even prove it is a chaotic system at all."
  As I said, you obviously have not the slightest bit of a clue about this subject, go educate yourself before you make yourself look even more of a fool making such stupid statements.
  But I'm going to turn around the argument on you seeing as you seem to know it all. Please provide me the paper you have written that demonstrably proves that HFT is not in the slightest bit responsible for any artificial deflation of stock markets, or any artificial booms that wouldn't otherwise have happened without it.
  The fact is, it's a chaotic system, and we have no idea it's impact on these sorts of issues. It's quite possible that it's been responsible for increasing the scale of booms leading to greater busts, and that it's been responsible for prolonging economic downturn unnecessarily.
  Again, you're making an argument without having even a basic grasp of the topic, and it's not my fault you do not understand the topic. That's entirely your problem, but your lack of understanding does not, as much as you'd like to believe otherwise, make me wrong.
  There are many thousands of papers and other writings and musings on on chaos and HFT because it's a major area of research. A quick Google will trivially confirm this for you so again, go educate yourself before talking any further utter nonsense.
116. Re:Should be a tax on every transaction by khallow · 2013-09-12 23:56 · Score: 1
  
  but that anything with potential to cause serious harm should be treated with some degree of caution and confirmation before "going live" with it.
  In that case, why are you concerned here with HFT? It's being treated with some degree of caution and confirmation. For example, the main exchanges (at least in the US) maintain very detailed records of every action done on the exchange. That's an extremely high level of confirmation.
  
  They also maintain the ability to "rollback" transactions so a wayward HFT system can be shut off and transactions reversed to a point prior, greatly reducing the degree of harm possible from HFT (or any other sort of short term trading issue).
  
  All that seems irrelevant to most concerns about HFT mentioned here on Slashdot in the past which either aren't related to HFT or attribute abilities to HFT which it doesn't have.
  
  In other words, normal market systems seem to be more than adequate for your concerns mentioned here.
  
  And finally, it's worth noting that the greatest degree of harm possible to any given party from HFT is to owners of automated computer trading programs that have exploitable weaknesses. I don't see that we're better off collectively for letting bad programming build up in the markets.
117. Re:Should be a tax on every transaction by khallow · 2013-09-13 00:16 · Score: 1
  
  The actors in trading are the actors involved in making the market, so the signals and intentions are effectively public: or at least they are public to all of the major players in the market. One of the key behaviours that has been discussed is bots that try to identify arbitrage opportunities by leaping in to close bids before other actors, then hold the asset for microseconds before selling it in different sized parcels at different prices. They provide liquidity at the expense of widening spreads for traders. In the terms that you are described it these are middlemen, but in the case of markets like nasdaq they are also participants.
  But then you're entering a realm where the transaction might not happen. For example, if I'm on market A and offer to buy at 10 and someone is on market B and offers to sell at 9. In theory that transaction should happen even without the connivance of HFT. But the problem here is that someone else on market B could get that order before I do or the seller could remove the order. Or maybe it just takes some time. The high frequency trader at least is closing the deal quickly for me by selling it in turn (within a minute fraction of a second) to me at a profit to themselves.
  
  What naysayers have been doing is claiming that HFT is acting as a parasite in this case, even though their action also insures that the transaction happens promptly at the price both parties happened to desire at the time.
  
  If this description does not convince you that the signals are public then I have a question for you: why do you think that firms pay so much to reduce latency to the exchange?
  
  There's big money in being the first to trade on newly released information. First order gets best prices.
  
  Latency is only an issue in reaction times for deciding whether to trade or not, and the model that you've described so far with synchronous actions is non-interactive...
  I disagree. It's just a particularly fast scheme for getting market information. It doesn't prevent the usual means of interacting with the market.
118. Re:Should be a tax on every transaction by khallow · 2013-09-13 00:27 · Score: 1
  
  The current system gives an unfair trading advantage to those with resources/quote> I think instead it's a fair trading advantage. If you too had those resources, you'd be able to get the same trading advantage. And I think it's fine that people with such things get such things. Keep in mind that it's just a volume discount on a service that has significant economies of scale. It's like claiming that it's "unfair" that someone with resources can get toilet paper for less per roll, because they're willing to buy them a million rolls at a time rather than half a dozen rolls at a time.
  
  So, why should I vote for politicians that don't want to change the rules. How does this benefit me? Make your case.
  An economy is not a zero sum game. HFT players do better and the services they provide help others, then that rubs off on the rest of society. Plus, otherwise you're setting up a precedent to interfere with other peoples' lives merely because you don't have any perceived skin in that game.
119. Re:Should be a tax on every transaction by khallow · 2013-09-13 00:35 · Score: 1
  
  If you want accurate pricing of securities, you need someone who is willing to speculate on the price of stocks. If you want liquidity, that is the ability to buy stock for near its market price, then you need market markets and other short term traders to be there to cover the other side of your transaction.
  
  The ecosystem comes with the territory. I've been in a number of markets, both real money and some play money experimental ones. This sort of behavior naturally comes out of having a market. And it provides significant benefits to those in the markets for the reasons that you want traders to be there for.
120. Re:Should be a tax on every transaction by khallow · 2013-09-13 00:48 · Score: 1
  
  I already answered the question in my previous post. Because I think we end up with a system that works instead of one that doesn't.
121. Re:Should be a tax on every transaction by Xest · 2013-09-13 00:56 · Score: 1
  
  The issue is that we still don't really know what impact HFT has on the markets. Has it prolonged the financial crisis? Has it led to bigger booms and hence bigger busts? That's the problem.
  A lot of countries have talked of the underlying feel of the economy feeling healthier than the markets and so forth suggest. Is this because HFT is artificially deflating the markets because of the economy as a whole when in a non-HFT world the markets would've picked up much better in those countries and possibly across the globe?
  The potential for flash crashes that can't be predicted is bad enough, and yes we can mitigate them to some degree but as well as the threat of those there's also the broader, more subtle impacts it's having on the markets that can have real actual negative effects.
  Post dot com we were told that HFT would help prevent that sort of thing in the future and you may be right that this was it being sold as something it couldn't possibly actually do and so unfair, but do we really know HFT wasn't in part responsible for the depth and duration of the current financial crisis? Some would argue yes, others no, but in reality we don't know. If future busts are similarly prolonged to the unprecedented degree this one was in duration then is it worth then consideration that maybe the subtle effects of HFT are at least in part to blame?
  As I say the flash crashes are one thing, but how do we measure the less prominently obvious effects? That's a very hard thing to do and there's still a massive amount of research being poured into it. It may be that the impact will be negligible, but at the other end of the scale it's quite possible it's taking us down paths that are far from optimal than a non-HFT or delayed/per-transaction taxed HFT world would give us.
  What if it is responsible for prolonged depression of the markets which in turn lowers investment, slows growth, and creates unemployment which can lead to people being homeless or even committing suicide. Would you agree that on the off chance a causal link (I'm not saying I suspect this is the case, but if, and I'm talking hypothetically here), that it has been in part responsible for this sort of real actual harm, then would you then agree that maybe it wasn't such a good idea after all at that point?
122. Re:Should be a tax on every transaction by alexander_686 · 2013-09-13 01:43 · Score: 1
  
  http://www.economist.com/news/finance-and-economics/21568433-early-evidence-french-tax-skimming-froth
123. Re:Should be a tax on every transaction by fredprado · 2013-09-13 02:50 · Score: 1
  
  Please provide me the paper you have written that demonstrably proves that HFT is not in the slightest bit responsible for any artificial deflation of stock markets, or any artificial booms that wouldn't otherwise have happened without it.
  
  Please provide me the paper that proves you are not a serial killer, otherwise we will have to put you in jail, just in case.
  
  The fact is, it's a chaotic system, and we have no idea it's impact on these sorts of issues.
  
  It may be, or not, but again you are unable to prove it is, and claiming that something fits in a mathematical model requires a mathematical proof.
  
  Again, you're making an argument without having even a basic grasp of the topic...
  I do have a very good grasp of the topic and after reading your nonsense I am quite sure my knowledge about Mathematics and Economics is significantly greater than yours, but suit yourself and keep hiding in your shell of ignorance and prejudice.
124. Re:Should be a tax on every transaction by Xest · 2013-09-13 03:00 · Score: 0
  
  Oh dear. You really do get desperate with your arguments when you're way out of your depth don't you?
125. Re:Should be a tax on every transaction by fredprado · 2013-09-13 06:23 · Score: 1
  
  Nah. The person that has absolutely no argument and is now trying to derail the debate is you, not me, my friend. It is a pathetic attempt to preserve your feeble self-esteem and escape the obvious conclusion that everything you wrote in this thread is utter nonsense. I pity you.
126. Re:Should be a tax on every transaction by ultranova · 2013-09-13 07:28 · Score: 1
  
  A small risk over thousands or more orders can become a big risk.
  
  Isn't it the exact other way around? The more orders you place, the less overall deviation from the expected outcome there'll be, since outliers either way will cancel each other out.
  
  --
  Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
127. Re:Should be a tax on every transaction by Anonymous Coward · 2013-09-13 07:44 · Score: 0
  
  You are still in the start market???
128. Re: Should be a tax on every transaction by khallow · 2013-09-13 09:37 · Score: 1
  
  HFT shops have (among others) an exception and can bid in increments of 0$.0001 to *ahem* provide liquidity.
  
  And that's not the problem I was referring to. People were claiming that they were sniffing the transaction queue stream and placing their own orders in front.
129. Re:Should be a tax on every transaction by khallow · 2013-09-13 09:55 · Score: 1
  
  Remember you are slow as molasses, while they operate in ns.
  
  I would be a fool to compete with them on their own ground without at least corresponding gear. Thus, I don't do that. The point of investing on a stock market isn't to beat armies of brilliant people with billions of dollars of gear. It's to both save assets for future use and to generate some decent growth and/or income of those assets. HFT doesn't threaten those goals.
130. Re:Should be a tax on every transaction by khallow · 2013-09-13 10:00 · Score: 1
  
  They see your order in the queue, then put their order in FIRST pushing your order back in the queue
  They don't have the capability to do this. Your order processes first, possibly with a transaction occurring, before theirs gets to the point of transaction.
131. Re:Should be a tax on every transaction by Optali · 2013-09-13 21:56 · Score: 1
  
  Vive la Revolution!!!
  OK, ok, then came the Napoleons, blah,blah... but mate... and the bunch of fun there was playing bowling with aristocrat heads?
  I personally prefer 1936-37 in Spain, when the Anarchists took over whole huge factories and maintained the weapons and goods production of the whole Republican army... until they came to a staggering halt thanks to the German Panzers and Luftwaffe. But it was a nice dream. People organizing themselves and proving that Libertarianism (the Real Thing) works even at large scales.
  But well, history is history and the past is just dust in cemeteries
  
  --
  -- 29A the number of the Beast
132. Re:Should be a tax on every transaction by Optali · 2013-09-13 21:57 · Score: 1
  
  Nooo!!
  Heaven on Earth!!!!
  We want: The beer volcano, the midgets and the strippers !!! Specially the latter.
  
  --
  -- 29A the number of the Beast
133. Re:Should be a tax on every transaction by Optali · 2013-09-13 22:09 · Score: 1
  
  Nice try.
  let's use a little example:
  I have 100 EUR. A guy comes and takes 10 EUR without asking.... but I still need to be happy because I can buy nice bedsheets. And kicking the guy in the balls is caused by my sexual frustration, innit?
  Quite cool, you are totally right... but I myself would prefer to invest these extra 10 bucks in a few bottles of good Belgian beer.
  I may also like to know why it is important to you what happened _after_ the bailout when the important fact is that the bailout actually happened (do you understand it? Bailout = guy taking my money?).
  Putting it a bit rougher you have just said that if a guy comes and rapes you in the but you should still be happy because the sun shines and the birds sing happy songs. Mind you, no probs with BDSM mate, but it's not my cup of tea.
  
  --
  -- 29A the number of the Beast
134. Re:Should be a tax on every transaction by Paradise+Pete · 2013-09-14 22:09 · Score: 1
  
  I believe it's the broker passing along a fee. If I take the bid or offer I am reducing liquidity in the market, if I create one I am increasing it.
  As for getting a better broker, I don't think I can find a better deal. Trades adding liquidity are less than a dollar, and often less than 50 cents. Trades taking liquidity are typically more than a dollar.
135. Re:Should be a tax on every transaction by Paradise+Pete · 2013-09-14 22:21 · Score: 1
  
  It seems to me that that rule is imposed only when entering into a second transaction that effectively cancels the other one. And it would be imposed on a per-item basis.
  It also appears that traders can choose to mark to market, but once they begin they have to continue to do so.
  But if I read it correctly I believe the original claim in this thread is not supported by that document.
So far removed from anything useful for society! by Rosco+P.+Coltrane · 2013-09-12 00:16 · Score: 5, Interesting

This sort of financial activities is complete economic nonsense, as it brings nothing of value to people, companies or other concerns that actually produce something useful to society as a whole. Just reading the /. blurb should be enough to convince anyone that "robot trading" is a parasitic activity that should be taxed to oblivion - by ways of a tax based on the speed of trading for instance - and financial markets forced to become what they're supposed to be: places for investors to invest in real economic activities for the long haul.

--
"A door is what a dog is perpetually on the wrong side of" - Ogden Nash
Re:So far removed from anything useful for society by drinkypoo · 2013-09-12 00:21 · Score: 1

All you'd have to do in order to fix this is delay all trades significantly. You don't have to care then if a human or a robot is trading. If the goal is to permit exchange of long-term investments, then there's no reason to permit rapid trading in any case.

--
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
sounds like by Connie_Lingus · 2013-09-12 00:21 · Score: 2

core wars 2013

--
never bring a twinkie to a food fight.
1. Re:sounds like by Anonymous Coward · 2013-09-12 01:21 · Score: 0
  
  SkyNet laughs at your belief that these trading robots are independent actors and not part of a larger unified algorithm.
So they get to play computer games by Chrisq · 2013-09-12 00:21 · Score: 1

So they get to play computer games, where the victims are ordinary people's savings, pensions, etc. This really has to stop, as another poster suggested a .001 cents fee per transaction would be enough to do away with microsecond dealing.
1. Re:So they get to play computer games by Thanshin · 2013-09-12 00:29 · Score: 3, Insightful
  
  So they get to play computer games, where the victims are ordinary people's savings, pensions, etc.
  Only if those people give them their savings to play with.
2. Re:So they get to play computer games by Chrisq · 2013-09-12 00:35 · Score: 1
  
  So they get to play computer games, where the victims are ordinary people's savings, pensions, etc.
  Only if those people give them their savings to play with.
  its hard to save without being at least indirectly effected. The very low interest rates are due to the recession and consequent easement process too.
3. Re:So they get to play computer games by Thanshin · 2013-09-12 00:55 · Score: 1
  
  its hard to save without being at least indirectly effected.
  Oh really? What exactly stops you from putting the money in a box or buying gold?
  Maybe you mean "It's hard to play the same game they are playing, to create profit from my money without working for it, as they do, but to do it without the risks that they take.".
4. Re:So they get to play computer games by Chrisq · 2013-09-12 01:52 · Score: 1
  
  its hard to save without being at least indirectly effected.
  Oh really? What exactly stops you from putting the money in a box or buying gold?
  Maybe you mean "It's hard to play the same game they are playing, to create profit from my money without working for it, as they do, but to do it without the risks that they take.".
  Gold prices certainly affected by speculation. As for putting it in a box - perfectly possible but you would be better off using a savings account even at today's low interest rates
5. Re:So they get to play computer games by Anonymous Coward · 2013-09-12 05:45 · Score: 0
  
  "Oh really? What exactly stops you from putting the money in a box or buying gold?"
  Government mandated inflation prevents you from effectively saving any sort of standard currency for any significant period of time. Gold is an option, but you are then put at risk by market speculators and manipulators. Even if you manage to break even on a nominal basis against inflation, the government will see the real increase as a capital gain and tax you on it.
  The whole system is rigged to get you to spend your money as soon as you get it, or to give it to the banksters by "investing" it. They have completely eliminated any incentive to save, and have thus sealed the country's economic fate. Without savers, there cannot be real capital formation.
6. Re:So they get to play computer games by Anonymous Coward · 2013-09-12 06:22 · Score: 0
  
  Do you imply average Joe hasa choice to play this game or not? How are you going to maintain the value of your savings?
  Due to inflation (set by those in power), your savings will erode away into nothing.. at 2-3% per year (more if you track real inflation). Did i mention those in power are placed there by banks/trading firms/financial firms?
7. Re:So they get to play computer games by Anonymous Coward · 2013-09-13 08:43 · Score: 0
  
  Actually putting it in a box is a good way to loose it altogether.
  Look up civil forfeiture....
  Basically whenever the policy discover a large quantity of cash they will impound it on suspicion of illegal activity. They don't charge you, they charge the thing they impound. Unless you can _prove_ where every cent of it came from you will never see any money (or goods) seized that way again. Even if you can prove it it's gonna take months or years of efford.
Re:So far removed from anything useful for society by Thanshin · 2013-09-12 00:25 · Score: 1

Why should they bring value to the people? They aren't owned by the people.
They are tools made to make money for those who already have a huge lot and would like to have more. "The people" isn't in that club.
Chaos Theory Leads to ... by BoRegardless · 2013-09-12 00:26 · Score: 1

Chaos, when a small perturbation allows a gain for a small action that one player has that others don't see.
It is like playing poker with a card counter near the end of the deck, but you aren't counting. You lose.
Re:So far removed from anything useful for society by Rosco+P.+Coltrane · 2013-09-12 00:28 · Score: 2

Yes, but allowing it and taxing the hell out of it would bring some of that money back into the government's pocket - or see it another way, the financial sumbitches that are bleeding most countries' economies white without any remorse today would have to start paying back some.
If a tax is levied on the speed of trading, at some point an equilibrium would be reached at which traders would consider the level of taxation acceptable: they wouldn't stop speed-trading, just doing it at a speed/cost that they're willing to bear. Better to collect money that way than to ban the activity altogether and collect no money at all.

--
"A door is what a dog is perpetually on the wrong side of" - Ogden Nash
Re:So far removed from anything useful for society by khallow · 2013-09-12 00:30 · Score: 1

This sort of financial activities is complete economic nonsense, as it brings nothing of value to people, companies or other concerns that actually produce something useful to society as a whole.

There's the usual benefits of better market liquidity and faster market response. The arms race is also building some cool tech, meaning a boost for the high tech industry.

You probably don't bring much to society either. So what?

Just reading the /. blurb should be enough to convince anyone that "robot trading" is a parasitic activity that should be taxed to oblivion - by ways of a tax based on the speed of trading for instance - and financial markets forced to become what they're supposed to be: places for investors to invest in real economic activities for the long haul.
And why should we do that and how is it going to do a thing for long term economic investment?

If instead you actually want to do something useful for long term investment, then get rid of Too Big to Fail and other business welfare, and most, if not all, protectionism schemes.
Re:So far removed from anything useful for society by drinkypoo · 2013-09-12 00:30 · Score: 1

Better to collect money that way than to ban the activity altogether and collect no money at all.
That raises the question, is it better to collect money than to ban the activity? Because I for one do not really see the need to hand the government more money when they will use it primarily for bombing brown people for economic gain.

--
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
This cannot end well by Anna+Merikin · 2013-09-12 00:32 · Score: 2

Ultrafast bots trading on minuscule changes by algorithm within a market sensitive to policy adjustments real or suspected by the Federal Reserve Bank, which admits it acts slowly, deliberately and without transparency or effective oversight, cannot end well.
1. Re:This cannot end well by Anonymous Coward · 2013-09-12 02:26 · Score: 0
  
  Add a neural net back-end, generating new trading strategies at 50 terabytes per second. And yes, give them the controls of your missile silos and the rest of the military.
Re:So far removed from anything useful for society by Anonymous Coward · 2013-09-12 00:35 · Score: 0

The people are the ones that have their pensions put into the stock market to provide the majority of the capital the Wall St gamblers use to make their money. At no point can the people get their money out without taking massive hits in fees, costs, additional commissions, additional handling charges, and then take a big hit with the IRS. If we could all remove our money, the rich would be fucked with this line of wealth increase, because they'd be limited to taking money from each other, not the masses. This is the sole reason for the existence public stock. Try going back a few centuries to see where corporations came from and why, and how they were made illegal for over a century.
Re:So far removed from anything useful for society by khallow · 2013-09-12 00:39 · Score: 1

If the goal is to permit exchange of long-term investments, then there's no reason to permit rapid trading in any case.
Sure, there is. Higher liquidity and better market responsiveness to new knowledge.

There's all this talk about the best way to break the markets so really fast trading can't happen. But we're putting the cart before the horse. The case for banning fast trading doesn't exist. Most such reasons turn out either unrelated to fast trading (such as trading through a brokerage which fronts the trade by default because you made them the middle man in your transaction) or attributing mystical powers to fast trading (such as a poster earlier claiming that a computer program could "see what slow dim you are going to buy").
With apologies to J. Swift... by fuzzyfuzzyfungus · 2013-09-12 00:39 · Score: 3, Insightful

The vermin only teaze and pinch
Their foes superior by an inch.
So, naturalists observe, a flea
Has smaller fleas that on him prey;
And these have smaller still to bite 'em,
And so proceed ad infinitum.
Predatory investing? by Culture20 · 2013-09-12 00:40 · Score: 4, Interesting

Investment is a collaborative strategy, a symbiosis. Programming "investment bots" to be predatory is not a good thing. It introduces parasites into the mix.
1. Re:Predatory investing? by Lumpy · 2013-09-12 01:12 · Score: 1
  
  Parasites are already in the mix, they are called investment bankers.
  
  --
  Do not look at laser with remaining good eye.
2. Re:Predatory investing? by b4upoo · 2013-09-12 01:18 · Score: 0
  
  Is an electronic parasite any worse than a human parasite who sucks the fruits of real labor and lives in wealth?
3. Re:Predatory investing? by fred911 · 2013-09-12 01:21 · Score: 1
  
  This is trading, not investment. There's quite the good possibility that these accounts are flat at close. If they are trading or making market, they provide liquidity. As long as the exchange is capable of providing orderly processing where bids / asks are filled at best or most current pricing, limit orders will protect the human. For most, buying and selling at market gives the sharks the advantage, and can be just plain stupid.
  
  --
  09 F9 11 02 9D 74 E3 5B - D8 41 56 C5 63 56 88 C0 45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
4. Re:Predatory investing? by khallow · 2013-09-12 01:50 · Score: 1
  
  Investment is a collaborative strategy, a symbiosis. Programming "investment bots" to be predatory is not a good thing. It introduces parasites into the mix.
  Why isn't it a good thing? It's definitely collaboration since it culls weak strategies and computer trading programs that are more vulnerable to such "predation".
5. Re:Predatory investing? by Culture20 · 2013-09-12 02:24 · Score: 1
  
  Trading stock in companies exists to facilitate the transfer of investment. Investment is the end goal for society, not trades.
6. Re:Predatory investing? by Culture20 · 2013-09-12 02:40 · Score: 1
  
  Why isn't it a good thing? It's definitely collaboration since it culls weak strategies and computer trading programs that are more vulnerable to such "predation".
  Because trading stocks is about the transfer of investment, not the transfer of wealth. Strategies shouldn't even enter in to the mix, let alone "computer trading strategies".
  Stock trading should be like the episode of "Everybody Loves Raymond" with the Hickidu cards. Ray and the other kid's dad are all thinking about the dollar value of the cards, whereas the kids are interested in the cards themselves. Investors who see their stock in a company as a vehicle to get money by selling it don't really care about investing, they care about gambling on a semi-sure-thing. A real investor wants to see a company grow, and receive a modest return on the investment in the form of dividends. That dividends are now a rarity shows how badly the system of trading stock has been perverted.
7. Re:Predatory investing? by GargamelSpaceman · 2013-09-12 03:33 · Score: 1
  
  Wait a minute, why is any different than humans doing the trading? What I see is an ecosystem of algorithms created by humans to make the most profit.
  There are few strategies, and lots of bots which creates unstable ecosystems. This is because humans haven't been sufficiently imaginitive to create a diverse ecosystem of bots.
  What will probably happen, is that someone will bring sexually reproducing bots to the table whose genes specify strategies to use. These bots will be raised by their parent bots, which will feed them seed capital to begin trading. Inneffetctive bots will lose their money and be unable to reproduce. Profitable bots will pass on their 'genes'. Once in a while the bots' 'biomass' (cash) will be harvested for by humans for consumption.
  Once the breeding creates enough diversity, the market ecosystem should stabliize.
  
  --
  ...
8. Re:Predatory investing? by Culture20 · 2013-09-12 09:29 · Score: 1
  
  Because their purpose isn't to invest. Their purpose is to own stock in a company for 0.00001 seconds until it rises in value, then dump it. It's not investment. And what most human traders do isn't investment either, but at least when they hold on to stock for a day or two, you could pretend that they're intending to keep it and make sure the company they partly own will do well. With the HFT, there's not even that pretense.
9. Re:Predatory investing? by khallow · 2013-09-12 13:11 · Score: 1
  
  Because trading stocks is about the transfer of investment, not the transfer of wealth.
  And as a necessary precondition, an investor needs to be able to evaluate the value of potential investments. The market "should" provide assistance for this in terms of prices for the various securities offered as well as a means to correct prices that are inaccurate. That leads to speculation and trading strategies, else would be investors are just throwing darts and hoping they hit the right invisible dart board.
Re:So far removed from anything useful for society by Anonymous Coward · 2013-09-12 00:40 · Score: 0

Each trade executed comes with risk involved. HFT are risk takers. They also provide liquidity to the market and are huge sources of tax for the governament and revenue for the brokers/clearing houses. One could argue that they are doing more for the economy then you are...
Re:So far removed from anything useful for society by drinkypoo · 2013-09-12 00:42 · Score: 2, Interesting

Sure, there is. Higher liquidity and better market responsiveness to new knowledge.
Higher liquidity is primarily a benefit to corporations, which are a legal fiction which has no reason to exist if it does not benefit the public.

The case for banning fast trading doesn't exist.
I just made it.

Most such reasons turn out either unrelated to fast trading
Straw man. We are currently specifically having a conversation in the context of discussing a problem which is caused by fast trading.

or attributing mystical powers to fast trading
Straw man. You're talking about some nutter, which has nothing to do with me.
If the best you can do is engage in logical fallacy, you clearly have nothing of value to say. Please move along.

--
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
If by JustOK · 2013-09-12 00:42 · Score: 2, Insightful

If the stock market made sense, it wouldn't work.

--
rewriting history since 2109
You were warned! by Anonymous Coward · 2013-09-12 00:43 · Score: 0

See, you legalize gay marriage and now we have physics professors writing econ paper! CHAOS!
Ho Hum - the exchanges are the biggest crooks by FriendlyLurker · 2013-09-12 00:51 · Score: 5, Interesting

The flesh-and-blood sharks were thrown in jail (overnight, litrally) convicted of fraud many years later and given a tiny slap on the wrist compared to their actual crimes. This not done in the name of justice, but part of a larger power struggle to take the NYSE electronic (the families that had operated the NYSE for 200 years were blocking the move, shit started to hit the fan around 2003). The exchange specialist were only accused of skimming off the top for a short period of time, but everyone familiar with this practice knows that it goes back to 1970's and most likely well before that (Richard Ney called them out for skimming off the top in his best selling book The Wall Street Jungle around 1970), Richard Wyckoff talked about the principles & techniques of stock market manipulation (by the exchanges) it as far back as early 1900's). Since 1970 that are billions of dollars skimmed off the top - no investigation until a power struggle. The practice goes on today and it is the electronic exchanges that benefit instead of the NYSE specialists. Any talented stock market data analyst can confirm this by taking NYSE data pre electronic exchange data and comparing their "skimming" techniques as confirmed in the court case against the electronic data. Wyckoff became very wealthy living off the crumbs of the exchanges ill-gotten gains.
All this news is underlining is that the exchanges are having more of their crumbs stolen by independent parties... if you want reform, start with brining transparent to the stock marker exchanges and their skimming off the top practices. The cost to society is enormous.
1. Re:Ho Hum - the exchanges are the biggest crooks by GodfatherofSoul · 2013-09-12 03:25 · Score: 1
  
  Richard Wyckoff? Dick Wyckoff? Really?
  
  --
  I swear to God...I swear to God! That is NOT how you treat your human!
Skynet? by Dark+Fire · 2013-09-12 00:53 · Score: 1

It would be ironic is Skynet emerged not from a military defense system but from a trading bot in the financial system.
1. Re:Skynet? by Dark+Fire · 2013-09-12 00:54 · Score: 1
  
  It would be ironic IF Skynet emerged not from a military defense system but from a trading bot in the financial system.
Re:So far removed from anything useful for society by khallow · 2013-09-12 00:55 · Score: 1

Higher liquidity is primarily a benefit to corporations, which are a legal fiction which has no reason to exist if it does not benefit the public.
But it does. It enables transactions of assets in a low risk way that would otherwise have to rigged via a complex loan. That employs people, gets things done, generates tax revenue, and generally improves the lot of society.

Straw man. We are currently specifically having a conversation in the context of discussing a problem which is caused by fast trading.
What problem? We're discussing phenomena of fast trading (such as the alleged "coalescing" of "flash mobs" of computer traders). We haven't actually gotten to any problems.

Straw man. You're talking about some nutter, which has nothing to do with me.
Whatever. I already am seeing the same sort of non sequiturs and unfounded claims. Why in the world, for example, did you bother to claim that "corporations, which are a legal fiction which has no reason to exist if it does not benefit the public" or that you had by making that uninteresting and irrelevant observation made a case for the banning of fast trade?
Re:So far removed from anything useful for society by khallow · 2013-09-12 01:01 · Score: 1

I see you ran out of answers. Good, maybe you'll think next time.
Re:So far removed from anything useful for society by drinkypoo · 2013-09-12 01:02 · Score: 1

Higher liquidity is primarily a benefit to corporations, which are a legal fiction which has no reason to exist if it does not benefit the public.
But it does. It enables transactions of assets in a low risk way that would otherwise have to rigged via a complex loan.
That objection would make sense if I had suggested delaying trades for days or longer periods, but I have made no such suggestion. In fact, I suspect that a delay of hours would be sufficient, if it would even take more than one of those. But you made assumptions, which shockingly turned out to be incorrect.

Why in the world, for example, did you bother to claim that "corporations, which are a legal fiction which has no reason to exist if it does not benefit the public" or that you had by making that uninteresting and irrelevant observation made a case for the banning of fast trade?
It's not irrelevant just because you say it is, but it is irrelevant when you bring up shit I didn't even say and then attack it in front of me as if anyone should care. The nature of corporations and that they are the primary benefactors of a bad law is always relevant when you're talking about the law.

--
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Not poker -- blackjack by Anonymous Coward · 2013-09-12 01:05 · Score: 0

It is like playing poker with a card counter near the end of the deck, but you aren't counting. You lose.
Card counting works in blackjack, not poker. Most forms of poker I have heard of use a new shuffle each game. Blackjack uses fewer cards per player per game and normally the deck (or "shoe") isn't reshuffled until it is used up. Note: this may be outdated information as I haven't played blackjack in a casino or cardroom for more than five years.
Yes, it is nit-picking.
Re:So far removed from anything useful for society by khallow · 2013-09-12 01:08 · Score: 1

But it does. It enables transactions of assets in a low risk way that would otherwise have to rigged via a complex loan.
That objection would make sense if I had suggested delaying trades for days or longer periods, but I have made no such suggestion. In fact, I suspect that a delay of hours would be sufficient, if it would even take more than one of those. But you made assumptions, which shockingly turned out to be incorrect.
That is interesting. I meant corporations not fast trading. That the response also works for fast trading is happy coincidence.

The nature of corporations and that they are the primary benefactors of a bad law is always relevant when you're talking about the law.
We weren't speaking of such bad law.
My hope is.... by Lumpy · 2013-09-12 01:11 · Score: 1

That they cause some serious horrible problems and make them revert to NO trading software allowed all trades must go through a person on the floor. Honestly trading is getting too fast and far to volatile the human bottleneck is needed to smooth things out.

--
Do not look at laser with remaining good eye.
1. Re:My hope is.... by the+eric+conspiracy · 2013-09-12 01:59 · Score: 1
  
  Ridiculous.
  Human beings are FAR more corrupt than any machine could be.
  I remember my father having to place stock orders over the telephone. The prices for this process were horrific compared to modern practices. Plus you got much worse execution and bid-ask spreads.
  The fact is the advantages of HFT are being worked out of the market and volumes are declining. Profit is being wrung out of the system. A few minor tweaks to the regulations (say imposing a 100 millisecond order delay) is all that one should even consider.
  The fact is the robots are losing money now.
  http://www.businessweek.com/articles/2013-06-06/how-the-robots-lost-high-frequency-tradings-rise-and-fall
2. Re:My hope is.... by h3st · 2013-09-12 06:35 · Score: 1
  
  make them revert to NO trading software allowed all trades must go through a person on the floor
  "Thou shalt not make a machine in the likeness of a human mind"? But then how will we get our Vile Offspring?
  
  --
  hei katter
3. Re:My hope is.... by Lumpy · 2013-09-13 02:35 · Score: 1
  
  Not when you have two of them. Humans are corrupt but two of them will fight each other in corruption as they both want to steal the same thing.
  
  --
  Do not look at laser with remaining good eye.
Analogy by mwvdlee · 2013-09-12 01:12 · Score: 1

The analogy is a bit far-fetched.
It sounds like an analogy looking for something to apply to.
A predatory analogy, if you will.

--
Slashdot social media options: AIM, ICQ, Yahoo, Jabber and Mobile Text. Why no MySpace?
Re:So far removed from anything useful for society by b4upoo · 2013-09-12 01:16 · Score: 1

You could make the case that almost all modern life does no good for humanity at all. To my eyes it seems like we are instituting a huge holocaust machine designed to ruin human life permanently. Take a look at the mass of concrete and blacktop called NYC. To suggest that it is sustainable is absurd. To not confront the fact that they are poisoning the public and that the ring of destruction does not reach out into rural areas takes a very narrow intelligence. Yet we have millions of citizens who really want to turn every inch of the world into another concrete nightmare.
Talk solutions by fulldecent · 2013-09-12 01:22 · Score: 1

Guys, the problems is not a lack of taxes (it rarely is), and the problem is not companies making opportunity out of asymmetrical information in the market which can't be explained to an average judge or stopped, and the problem is not prosecutors that even when winning a record judgement or settlement are still not deterring behavior, and the problem is not bureaucrats who are setting the laws to keep these games going.
The problem is our markets (brokers, agents, order processing and the floor) are set up in a way so that real investors are thrown to the wolves. When someone invents a market set up that is less susceptible to gaming it will be gamed less.
If we get to the point where the NSA/Russians are tapping your computer to get trade orders and sending that information to GS for front running we will know that the system is designed properly.

--
-- I was raised on the command line, bitch
1. Re:Talk solutions by the+eric+conspiracy · 2013-09-12 01:52 · Score: 1
  
  The problem is our markets (brokers, agents, order processing and the floor) are set up in a way so that real investors are thrown to the wolves.
  
  That is different from the past how?
  Hint: Look up stock market trading practices during the roaring 20's.
  The stock markets are capitalism red in tooth and claw. There is far more regulation and control now than there has been historically. That plus the rise of the large mutual fund groups has (cf Vanguard. $2T AUM) have made it a reasonable place for long term individual investors at the same time it allows for rapid price discovery.
  Individuals who overcome the typical bad decision making process driven by market psychology can do well (since 1800 the average return on assets in the NYSE is 8%). However like anything in life success takes study and work. You can starthere.
2. Re:Talk solutions by fulldecent · 2013-09-12 02:11 · Score: 1
  
  Of course, the suckers are the ones who watch TV, get scared, and trade constantly based on information they aren't sure about.
  
  --
  -- I was raised on the command line, bitch
Robots? by Anonymous Coward · 2013-09-12 01:23 · Score: 3, Funny

Robots? Really??
So Robots physically stormed into the NY Stock Exchange and took over trading?
Please, for the love of Terminator, please stopping calling programs "Robots"... "bots" are bad enough but can be overlooked but do not call them "Robots".
1. Re:Robots? by wiredlogic · 2013-09-12 03:08 · Score: 1
  
  I don't know about you but I love it when my robotic spreadsheet adds up a column of numbers for me and then my robotic typesetter formats the results in my TPS reports.
  
  --
  I am becoming gerund, destroyer of verbs.
2. Re:Robots? by BigSlowTarget · 2013-09-12 05:36 · Score: 1
  
  We did not have to storm into the NY Stock Exchange. We can use the internet now: http://i.imgur.com/SOkmiks.jpg We also type faster than you.
Hopelessly Naive by GlobalEcho · 2013-09-12 01:29 · Score: 5, Insightful

Consider the following quote from the paper

Since both crashes and spikes are typically more than 30 standard deviations larger than the average price movement either side of an event (see Figs. 1A and 1B), they are unlikely to have arisen by chance
This statement implies that the authors believe a gaussian model "should" apply to the market dynamics. As Benoit Mandelbrot and many others before and after him point out, financial markets never have followed gaussian dynamics and they probably never will. It's especially silly because they go on to analyze the distribution of Ultrafast Extreme Event (UEE) sizes as a power law.
Today's market has both accumulation algorithms now used by mutual funds and other sophisticated "buy and hold" investors, and market-making algorithms used by HF firms, and I fully believe there is some interesting dynamics arising from all that. Whether it is any weirder than the slower, human-derived, dynamics of yesteryear is still in doubt. Humans are so much more complex than any of those algorithms that I suspect if you examined the market behavior in 1980, and sped it up, you would see plots wilder than anything Nanex produces.
The paper is somewhat interesting, but not very convincing.
1. Re:Hopelessly Naive by Anonymous Coward · 2013-09-12 08:14 · Score: 0
  
  Since both crashes and spikes are typically more than 30 standard deviations larger than the average price movement either side of an event (see Figs. 1A and 1B), they are unlikely to have arisen by chance
  This statement implies that the authors believe a gaussian model "should" apply to the market dynamics. As Benoit Mandelbrot and many others before and after him point out, financial markets never have followed gaussian dynamics and they probably never will. It's especially silly because they go on to analyze the distribution of Ultrafast Extreme Event (UEE) sizes as a power law.
  I hope you do realize that at 30\sigma even a fat-tailed, generalized extreme value distribution will have an absurdly small 1-CDF value, right? It does not have to be about 10^-200 like a Gaussian to be improbable, 10^-20 would be quite enough.
Sounds like locusts by Anonymous Coward · 2013-09-12 01:30 · Score: 0

not so bad when they're by themselves, but if you get too many of them in one place fear of cannibalism drives them out of control.
France didn't introduce Tobin by Anonymous Coward · 2013-09-12 01:39 · Score: 1

France introduced a weird exemption to their transaction tax THAT DOESN'T APPLY IF YOU BUY AND SELL ON THE SAME DAY.
Volatility: That little extra rule, means that the short term traders switched to day trading so more short term jitters. Higher spreads and lower liquidity are not a bad thing, it simply means people are more settled on the stock they buy. Which was the intent, it doesn't mean HFT's are more profitable. Only the day-trade exemption is the problem. Day trades should not be immune from the tax, it was to appease lobbyists.
France has worked quite well, I've got about 1/3rd of my investments in France now, when I sell I place GTC orders at my sell price and wait a few days for someone to be interested. No need to sell that instant, I'm not a HFT trader, I'm an investor aiming to make 30% minimum on a longer term investment.
1. Re:France didn't introduce Tobin by alexander_686 · 2013-09-12 02:15 · Score: 1
  
  Could I get a cite for a exemption on same day transactions? I know there is a exception for same day operation transactions – for example FX trading to make loan or supplier payments. But I am not aware of any exception for stock trading – unless our account are wrong.
  And can you explain how higher spreads are better for you and not for the middle man? I mean the spread is how they make their money. You have to pay more to buy the stock and you get less when you make the stock. I can’t think of good thing about that.
  I am going to have to contest you logic on volatility. If that were true then dual listed stocks (e.g. stocks listed on both the Paris and London exchange) would have about the same volatility. One of the ways that HFT make money is to exploit the price differences on different markets. If markets were frictionless then the same stock on different markets should have the same price and volatility. The tobin tax introduces friction. After the tobin tax the volatility of stocks in the Paris exchange was higher than that of London.
  And as a aside, there has been an argument about HFT, volatility, liquidity and spreads. The general concusses is that HFT increase liquidity and decrease spreads during normal operations and that this is a good thing. (flash crash aside). Some have argued that they increase volatility, such as flash crashes, which is a bad thing. However the proof of this is currently weak. The argument goes on.
  I will point out that there is a difference in investing in French companies and investing though the French stock market. If you check more and more shares of French companies are trading outside of France.
A few comments about TFA by ggraham412 · 2013-09-12 01:44 · Score: 1

One criticism have about the content of the article is that the while the authors argue that the UEE's (the fast price spikes) aren't correlated with news events and can't be explained by random behavior, they don't really address another obvious source of UEEs: hedgers or speculators in the market who are liquidating a position as part of their **long term** needs or trading behavior. Ie- how do they know these aren't market orders (eg- Sell 100 APPL) placed by some guy day trading his brokerage account? If the order book is populated at a few lots per price level, a larger market order will momentarily cut through those levels and then recover. I think they try to sweep that issue under the rug by claiming that the trading volume during these spikes is not appreciably different from trading volume during quiescent times. OK, but it doesn't address who placed the order and why, and what are those volumes anyway?
A second criticism I have is that they explicitly imply that there may be "degree of causality between propagating cascades of UEEs and subsequent global instability". I see correlation here, but no causality. Indeed, if there is global instability, a lot of people in the market will be unwinding positions, and you will see a lot of UEEs as they do so. In other words, there is a strong common sense case to be made for causality **in the other direction** than what they are claiming. I would need to see better evidence than just an overlaid plot (figure 1C).
Finally, and this is more of an observation, does anyone pay attention to how fast the price recovers after a UEE, for whatever reason it originally happens? The recovery happens so quickly because of the dreaded high frequency algorithms. What did UEEs look like ten years ago - when someone came along and sold 100 shares of X, did the market take minutes to recover? That it comes back within a second seems like progress to me.
Re:So far removed from anything useful for society by alexander_686 · 2013-09-12 01:49 · Score: 1

You know, the same argument was made about railroads back in the 1850s. The railroads added nothing of value because they created nothing - only moved things around. Moved things around at 20% of the old cost, but still only moved things around.
Let us make a daring assumption that the Capital Markets actually create some value by allocating economic resources. If that is the case we can make the same case about algorithmic trading. They have done nothing except reduce the cost of trading by 80%.
The difference between algorithmic trading and HFT is the same difference between speculators and investors – purely subjective. Do HFT make big bucks? Sure – but much less than the fat days of yesteryears.
Re:So far removed from anything useful for society by kajsocc · 2013-09-12 01:54 · Score: 1

Just reading the /. blurb should be enough to convince anyone that "robot trading" is a parasitic activity that should be taxed to oblivion
Just from that, huh? So we should just take everything "a researcher at the University of Miami" says as gospel? If the researcher had said trading robots are cute, pink, fluffy creatures that play nicely with the unicorns, you'd be arguing we should be throwing money at them.

That's nonsense. You should always make an effort to hear the other side before coming to a conclusion. Why was this modded up?
Re:So far removed from anything useful for society by rwv · 2013-09-12 01:55 · Score: 1

This sort of financial activities is complete economic nonsense, as it brings nothing of value to people,

Indeed, economics is a zero-sum game. For every dollar somebody gains, somebody else loses a dollar.

companies or other concerns that actually produce something useful to society as a whole.
So companies are good, but buying and selling ownership rights of companies is very, very bad.

Just reading the /. blurb should be enough to convince anyone that "robot trading" is a parasitic activity that should be taxed to oblivion
Not to mention the slice of the software industry whose bread-and-butter is "robot trading" software.

- by ways of a tax based on the speed of trading for instance -

"Sir, I pulled you over for doing 85 transactions per second in a 65 TPS zone."

and financial markets forced to become what they're supposed to be:

Financial tools for accumulating wealth?

places for investors to invest in real economic activities for the long haul.
So buying and selling ownership rights of companies is actually a good thing. I should get on that.
In all seriousness... lots of people and businesses struggle to "earn" more than they spend in a given month. The stock markets, however, offer people one option in case they have somehow managed to earn more than they need each month. The businesses who run the stock market are therefore entrusted in these people's wealth that is being accumulated for their retirement. People are free to use or ignore the stock market retirement companies. Some people may even be able to outperform these organizations in the long term because of lower overhead costs. Everybody else, however, trusts their retirement in these companies with deep pockets and access to "advantages" such as "trading robots" that maximize their retirement accounts. To this end... somebody else pays to balance those gains which is where TFS talks about being a "prey" instead of being a "predator". At the end of the day, though, if you think of the stock market as "Supplemental Social Security" (at least in US where SS is an implementation of a government-operated retirement organization) then maybe you'll be able to rest easier.
Re:So far removed from anything useful for society by Entropius · 2013-09-12 01:57 · Score: 1

Perhaps it is economic nonsense, but does it harm anyone who isn't a voluntary participant? We don't live in a society where everything is forbidden except that which is permitted, but the reverse. Let people buy and sell as they see fit; there's no reason to make anything illegal (or tax it out of existence) unless there is clear fraud. These HFT people aren't making any money except by other people voluntarily handing it to them.
WTF? by Anonymous Coward · 2013-09-12 01:59 · Score: 0

I thought the problem was the rule that allowed them to _rescind_ a sell offer within a few milliseconds, but _after_ buy offers had been tendered, thereby garnering critical market information. There is an obvious potential here to abuse the system by inserting an entity into an otherwise simple transaction in a purely parasitic manner. We don't need a per transaction tax; either random delays applied to all HFT or a minuscule tax on rescinded offers would fix this.
1. Re:WTF? by PPH · 2013-09-12 03:45 · Score: 1
  
  Right. But that's easy to fix. Just lock the HF trader out following such an aborted transaction. Give them a phone number to call. This will connect them with an individual* at the SEC, who will take the elevator down to the server room, log in to thee system and manually reset their account. That will happen a couple of times and then the entire HFT game will be over.
  *Some old guy who doesn't move very fast.
  
  --
  Have gnu, will travel.
Seems Like An Easy Solution by Greyfox · 2013-09-12 02:04 · Score: 1

Just introduce a random delay between 1 and 5 minutes for every trade that takes place. Problem solved. You're welcome. :-P

--
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
1. Re:Seems Like An Easy Solution by Firethorn · 2013-09-12 02:30 · Score: 1
  
  At the rate HFT works at, 0-4 seconds would be more than enough, and allow random Joe blow to buy/sell stock without having to wait much more than the usual expected webpage load times.
  
  --
  I don't read AC A human right
Re:So far removed from anything useful for society by the+eric+conspiracy · 2013-09-12 02:06 · Score: 1

Nonsense. Corporations are owned by people. They don't exist in a vacuum. Almost everyone in America, through pension plans, personal savings, or state bond issues has an investment in financial markets.
People, like me, who invest in the stock market benefit tremendously through high levels of liquidity.
When I go online and place an order to sell stock, and see that order filled in a fraction of a second at exactly the quoted price (with bid-ask spreads on the order of one cent) I really do appreciate having this liquidity.
Re:So far removed from anything useful for society by Anonymous Coward · 2013-09-12 02:07 · Score: 1

Personally I prefer the idea that you can only trade at fixed timepoints. For example, if trades are only commited once every 20 seconds or so it would probably be enough to allow the most ridiculous applications of robot trading to disappear while not being a problem for "real" trades.
Predator-prey & evolution are unstable inheren by Impy+the+Impiuos+Imp · 2013-09-12 02:11 · Score: 1

From TFA:

When there’s a normal combination of prey and predators, he says, everything is in balance.
No, predator-prey is never in balance. Biologists assumed this, but differential equation simulation immediately destabilizes. Predators grow and overfeed, dropping prey populations, and then predators collapse, and prey rebounds, going way up. The relationship is inherently unstable, like wind blowing over water.
This is all before evolution does anything, making further nodes of destabilization as predators and prey constantly try to evolve to outdo each other. Evolution is also not stable for a similar reason, even in a completely unchanging environment.

--
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
Re:So far removed from anything useful for society by njnnja · 2013-09-12 02:16 · Score: 1

The nature of corporations and that they are the primary benefactors of a bad law is always relevant when you're talking about the law.
The kind of firms that engage in HFT could easily be (and often are) set up as partnerships. The firms that are hurt generally have to be set up as corporations. So a law restricting HFT would be a net help to corporations.
Increasing friction can increase fairness by davidwr · 2013-09-12 02:17 · Score: 1

If you increase the "friction" (cost) of trading so it's no longer profitable to buy and sell on miniscule increases in prices, high-frequency trading will diminish.
"Friction" is usually undesirable but if it increases fairness it can be desirable in some circumstances.

--
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
1. Re:Increasing friction can increase fairness by Anonymous Coward · 2013-09-12 02:37 · Score: 0
  
  This is Slashdot, a car analogy is needed.
2. Re:Increasing friction can increase fairness by xombo · 2013-09-12 03:07 · Score: 1
  
  Those fees would just be passed on to the consumer. I like the idea of limiting quote inquiries or introducing random delays in either quotes or trades so as to make profiting from the marginal changes in short time periods much, much harder.
3. Re:Increasing friction can increase fairness by PPH · 2013-09-12 03:38 · Score: 1
  
  Driving with your left foot on the brake.
  
  --
  Have gnu, will travel.
Just use Bitcoin and be done with it. by VortexCortex · 2013-09-12 02:36 · Score: 1

"Even though each trading algorithm/robot is out to gain a profit at the expense of any other, and hence act as a predator, any algorithm which is trading has a market impact and hence can become noticeable to other algorithms," said Neil Johnson, a professor of physics
So, the major market players are machines, and they're capable of bringing the system to its knees... The fastest machine gets you the most money for your investment. And then folks have the audacity to scoff at bitcoiners when the whole fucking world runs on a more broken version of the exact same shit.
All of you monkeys are morons.
Re:So far removed from anything useful for society by Anonymous Coward · 2013-09-12 02:55 · Score: 0

Well, they will collect the money anyways. It's better to collect it from people that have so much they play games with it, than from people that are forced to use their money to feed their families. Oh wait, no it isn't, what am I talking, USA USA USA! BOOOYAH! Tax the poor!
When is Smoke Tangable? by LifesABeach · 2013-09-12 03:32 · Score: 1

When a liar speaks.
Intentionally loaded terminology by J'raxis · 2013-09-12 03:52 · Score: 1

"Predators" are animals that seek out and kill one another. These bots sound like they're simply competing with one another. But if I were to use that word, I wouldn't be able to make these things sound as evil and horrible and nasty as the author of this article wanted to.

--
Liberty in your lifetime
Don't have a problem with Algo's by Maxo-Texas · 2013-09-12 04:04 · Score: 1

I have a problem with my trades being cancelled when the algo's screw up.
If they sell me a $100 stock for $10, that should be their loss.
If they buy a $30 stock for $120, that should be their loss.
I have much more problems with the US government changing fundamental rules.
If I were going to do anything about algo's, I'd charge them 1 penny for each cancelled trade.
But Algos trading creates similar waves and cycles as humans.
When the government changes the rules, the market trades goofy for several weeks. It's without warning. And the changes can be extreme because they basically just changed the fundamental values everything cycles around with a penstroke.

--
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Simply pay Sales Tax when stocks are bought by Anonymous Coward · 2013-09-12 04:15 · Score: 0

very simply way to get rid of the HFT parasites, force traders to pay sales tax at time of purchase. No deferrals, no write-offs, etc... Pay 6% on the purchase price when it was bought.
Re:So far removed from anything useful for society by Anonymous Coward · 2013-09-12 04:37 · Score: 0

This sort of financial activities is complete economic nonsense, as it brings nothing of value to people, companies or other concerns that actually produce something useful to society as a whole. Just reading the /. blurb should be enough to convince anyone that "robot trading" is a parasitic activity that should be taxed to oblivion - by ways of a tax based on the speed of trading for instance - and financial markets forced to become what they're supposed to be: places for investors to invest in real economic activities for the long haul.
And behold, we have an explanation as to why the economy is where it is: people who don't know what they're talking about, but still feel compelled to prevent consenting adults from engaging in their own private business. The only "parasitic activity" is forcing us to invest in their system.
So then who are the prey? by Valdrax · 2013-09-12 04:51 · Score: 1

I agree that this is pretty loaded language, and I am somewhat concerned that the author's implied solution is to add more prey to bring the system back into "balance." So then, who are the prey, if all the HFT bots are predators?
I suspect I won't like the answer.

--
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
Re:So far removed from anything useful for society by Anonymous Coward · 2013-09-12 04:52 · Score: 0

This sort of financial activities is complete economic nonsense, as it brings nothing of value to people,
Indeed, economics is a zero-sum game. For every dollar somebody gains, somebody else loses a dollar.
So sad that many reading this will miss the dry humor and won't understand that the sentence above is joke. I have spent so many hours explaining to people that nobody *loses* anything when a stock price goes up and you sell it for more than the purchase price.
For anyone still not understanding this, the inverse is true as well - when you lose money, there is not _necessarily_ a corresponding gain in another portfolio somewhere. The best illustration is a stock you bought for $50 and sold at $40, you lost $10 a share. A guy covering a short position on the stock he opened at $30 is able to close out his position by buying the shares at $40 that you sold. He also has lost $10 a share. $20 of losses with no offset.
Comment removed by account_deleted · 2013-09-12 05:13 · Score: 1

Comment removed based on user account deletion
What can go wrong in 0 ns and thousands of bots? by Anonymous Coward · 2013-09-12 05:19 · Score: 0

I told hundreds of people so, years ago.
People didn't listen.
Re:So far removed from anything useful for society by Anonymous Coward · 2013-09-12 05:36 · Score: 1

The liquidity that people like to trumpet as a benefit of HFT is false. As soon as there's a problem in the markets where extra liquidity would be helpful, it immediately dries up because the algos don't want to take a loss either.
Enforce even a 2 second requirement on any transaction and the playing field would be leveled again. That is, you put out an offer to sell, it has to stay out there for 2 seconds or until someone takes you up on it, whichever comes first. Of course, the big HFT shops will cry and whine, threatening to take their ball and go home, but the markets would be a much better place afterwards.
hah, captcha: investor
Re:People should study economics before.. by Anonymous Coward · 2013-09-12 06:12 · Score: 0

I have seen some very smart friends/people make some very stupid comments about economics.
Here we go..ya'll don't know jack schitt therefore your wrong and I'm right play.

It's sad that people then demonize the "price-gougers" that took the trouble of transporting gasoline from Texas to Louisiana. Price-gouging is good, and allows supplies to quickly reach disaster-stricken areas.
Only problem with this analogy is HFT does not buffer or regulate supply it simply extracts value. HFT is the middle man leeching off legitimate efforts of others.

Regarding high frequency trading in particular, read articles such as "How High Frequency Trading Benefits All Investors"
Better idea why don't you just tell us what is good about it cuz every link I see is either paywalled, does not provide a justification or sites studies which enumerate negative impacts of HFT.

And, these "evil" high frequency traders, by making money doing so, are benefiting society, though I know it's not so easy to see.
Theres an old saying "Put up or shut up". Make the specific case that HFT specifically helps anyone. Nobody is arguing "markets" are dead weight.

Any time you act on a free-market (that is, free, uncoerced action) opportunity to make money, (such as transport gasoline to an area of shortage), you are helping society.
This is utter nonsense HFT exerts downward pressure on speculation.

Every time a trade occurs, society gets wealthier as a whole. That's Economics 101. *More trade is good, not bad.*
No, not "every time". Blanket statements are easy to dismiss. For example nobody is served by trades based on false interpretations of reality or false signals. If the actual cost of a commodity is $5 and some computer is suckered into thinking the worlds supply of vespene gas is in jeporday the commodity now costs $15 and buyers everywhere are fucked for no reason.
Obligatory by Anonymous Coward · 2013-09-12 07:14 · Score: 0

I, for one, welcome our robot merchant overlords.
Re:So far removed from anything useful for society by Anonymous Coward · 2013-09-12 07:25 · Score: 0

The problem is the "zero-sum bias". Up until recent history there was no significant economic growth over a lifetime - stone age humans barely scraped by, dying in a tribe no bigger or richer than the one in which they were born. Back then things really were zero sum so the bias was helpful and usually accurate.
Re:So far removed from anything useful for society by Anonymous Coward · 2013-09-12 07:34 · Score: 0

There's a thief on the loose! We force everyone to give him their money, and then he absconds!
To solve this problem we're going to keep forcing everyone to give the thief their money, BUT restrict what he can do with it. Thus addressing the root cause of this problem once and for all, all without any threat of regulatory capture.
diff eq by rlwhite · 2013-09-12 08:32 · Score: 1

This reminds me a lot of the problems that differential equations model. We have a complex system with inputs and outputs, steady states and extremes. If we knew every bot in the system, perhaps we could model it and tell where the steady states and extremes are, maybe modify the rules to make it safer. But we can't unless we register every bot, review them, and regulate every deployment these firms do on their systems. It would be nearly impossible to get anything done.
If it were up to me, I'd outlaw electronic trading algorithms completely. Too dangerous to have unknown systems governing our markets. If a tall building didn't have this kind of modeling done to determine that it wouldn't blow over in a strong wind, we'd never let it be built. Our stock market with the savings of most of our country and many around the world, on the other hand....
Re:Predator-prey & evolution are unstable inhe by rlwhite · 2013-09-12 08:43 · Score: 1

If you had a circle (as opposed to a chain) of predator/prey relationships with strengths and weaknesses that balance, then there would be a chance at stability, but that seems like a very remote possibility, not a normal combination.
Re:So far removed from anything useful for society by Anonymous Coward · 2013-09-12 09:41 · Score: 0

This sort of financial activities is complete economic nonsense . . .
If that's your opinion, then don't participate in it.

. . . as it brings nothing of value to people, companies . . .
If it didn't bring value, the transactions wouldn't happen to begin with. Obviously, both buyer and seller benefit, generally. I know it's confusing for many on the left, but that's how free markets work.

. . . or other concerns that actually produce something useful to society as a whole.
Not that I agree with your premise, but in a free society, individuals may or may not produce something that's useful to society as a whole, and that's okay. That's how freedom works.

. . . "robot trading" is a parasitic activity that should be taxed to oblivion . . .
What a tyrannical suggestion. Do you hate freedom or just freedom for others?
By the way, taxation should only be used to fund necessary government activities, not be perverted into a tool to influence behavior.

. . . financial markets forced to become what they're supposed to be: places for investors to invest in real economic activities for the long haul.
The increased speed of investment doesn't make such investments "un-real." They are very real and provide real benefit to the seller and buyer when both realize a return on investment. It's not for you to decide if someone invests for short-term or long-term gain. Since it's not your money, it's not your call.
Re:So far removed from anything useful for society by Patch86 · 2013-09-12 11:02 · Score: 1

Clarify for me (because I appear to have become stupid tonight)- if you were to delay every transaction by let's say 1 hour, how would that help? If every transaction were delayed by exactly the same 1 hour period, there would still be an advantage in being first to put an order in, which means there would be still be an advantage in having the fastest trading machine- see the market information quickly, get the order in fast before anyone else beats you to it. The only difference is that you have to wait an hour before you see the results.
It would add an element of suspense to the system seeing as you won't know if you've cocked up on a trade for an artificially long time, but I don't see how it fixes the problem.
Re:So far removed from anything useful for society by khallow · 2013-09-12 12:19 · Score: 1

The liquidity that people like to trumpet as a benefit of HFT is false. As soon as there's a problem in the markets where extra liquidity would be helpful, it immediately dries up because the algos don't want to take a loss either.
Liquidity should dry up when there's a large amount of uncertainty. I don't see the problem.

Enforce even a 2 second requirement on any transaction and the playing field would be leveled again.
Why should the playing field be level?
Class War by DarthVain · 2013-09-13 02:12 · Score: 1

War implies a concerted effort of will.
It is more like a lack of empathy and total disregard for anything other then themselves.
It would be like Louis the 16th running over a bunch of peasants with his carriage. It may be that there was no intent to purposely run over poor peasants, but then again neither does he care other than perhaps the mess or damage to said carriage.
The 1% may look like they are working in concert, but I think it is more of matter of them all being pretty much the same. If many are using HFT to bleed free money out of the market which further imbalances the concentration of wealth, it is because they are able to. Make up some other method, or product (eg. derivatives), and what I can only call law/regulation as that is how corrupt government is these days, and that is what they will do. Ethics, morality, even legality really doesn't really come into play. If they think they can get away with it and a profit made, it will be done. It has been shown time and again that government is in bed with big business, politically that is how they get elected, with money (and yet fools still vote for them). It has been shown time and again that you can do blatantly illegal acts, and steal HUGE amounts of money, with little or no repercussions. There has only been a few instances where anyone has ever been punished. Bernie Madov for example did get jail time, however he stole more money from people than anyone else in the world EVER, also I suspect that because many of the people he may have stolen from were also rich and powerful may have had something to do with that. Heck there was a guy in Toronto, Canada that basically did the same scam, except he also stole from friends and family. These people simply do not care past their own desires. So long as we allow it, in that there are little repercussions, and the government is actively courting these individuals for favors for legislation nothing is about to change. This would require the total decoupling of Corporate and State, just like the Church and State years ago.
Anyway not sure how likely that is about to happen, the entanglement is pretty complete. When the people making the decision are the ones that need to be limited it usually doesn't work out so well. People would really have to take notice and actively do something, which given the apathy and the political machinations to keep people (base) stupid and compliant, and the mainstream media hasn't been all that helpful in this regard either.
"Skynet begins to learn at a geometric rate. " by ToddInSF · 2013-09-13 05:24 · Score: 1

"...It becomes self-aware at 2:14 a.m. Eastern time, August 29th. In a panic, they try to pull the plug..."
"We were working secretly- For the military" by ToddInSF · 2013-09-13 05:34 · Score: 1

Our experiment in sound

Was nearly ready to begin

We only know in theory what we are doing

Music made for pleasure Music made to thrill

It was music we were making here until

They told us, all they wanted Was a sound that could kill someone From a distance, so we go ahead And the meters are over in the red

It's a mistake in the making

From the painful cries of mothers To the terrifying scream We recorded it and put it into our machine

Then they told us, all they wanted Was a sound that could kill someone From a distance, so we go ahead And the meters are over in the red

It's a mistake in the making

It could feel like falling in love It could feel so bad

But it could feel so good It could sing you to sleep

I'll bet my mum's gonna give me A little toy instrument

But that dream is your enemy

We won't be there to be blamed We won't be there to snitch I just pray that someone there Can hit the switch

But they told us, all they wanted Was a sound that could kill someone From a distance, so we go ahead And the meters are over in the red

It's a mistake we've made

And the public are warned to stay off ...
Comment removed by account_deleted · 2013-09-13 12:06 · Score: 1

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