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How Microwave Transmission Is Linking Financial Centers At Near-Light Speed
The L.A. Times has a short but compelling article about the state of the art (and coming state of the art) in dedicated networking technology in one of the applications where you'd expect the customers to care most about it: connecting financial trading centers. Milliseconds count, and the traders count milliseconds. From the article, one example:
"[New York-based networking company] Strike, whose ranks include academics as well as former U.S. and Israeli military engineers, hoisted a 6-foot white dish on a tower rising 280 feet above the Nasdaq Stock Market's data center in Carteret, N.J., just outside New York City.
Through a series of microwave towers, the dish beams market data 734 miles to the Chicago Mercantile Exchange's computer warehouse in Aurora, Ill., in 4.13 milliseconds, or about 95% of the theoretical speed of light, according to the company. Fiber-optic cables, which are made up of long strands of glass, carry data at roughly 65% of light speed."
There was a story a few weeks ago about someone in Chicago that had a faster than light connection (when the Fed issued a statement about interest rates)
Light speed in glass is less than that in air, which is less than that in vacuum. But the light (infrared, microwave, your favorite color) is still travelling at light speed.
Were that I say, pancakes?
Market-making dealers push prices away from their efficient levels, as even Fischer Black noted. From Perry Mehrling's Lecture 22 Notes, in his Economics of Money and Banking, Part Two MOOC:
Dealers profit by exploiting market inefficiencies, and pushing prices away from their efficient levels, within a factor of 2. So if the efficient level of a barrel of oil is $100, the dealers can push the price down to $50 or up to $200. That's a pretty wide margin of error.
For some place that's supposed to be for nerds who, unlike me, finished college, this discussion is embarrassing. Parent post and 1 or 2 other posts have it right, and this is something that every radio guy knows as well.
Wikipedia references: http://en.wikipedia.org/wiki/Velocity_factor
More general discussion with heavy math: http://en.wikipedia.org/wiki/Group_velocity
The reason for it all: http://en.wikipedia.org/wiki/Refractive_index
This is straight from the horse's mouth: http://www.corning.com/WorkArea/downloadasset.aspx?id=39403
None of this makes a difference to honest trading except to ensure its loss making properties.
I think I see a flaw in your cunning argument: First, all trades are honest as long as it is not made under duress. And any macroeconomic teacher will tell you that in a trade both people get something they want, so the more trade you have, the better the economy is. People are operating under a wide variety of misconceptions regarding high speed trading, and only a few of the criticisms are valid. High speed trades mean that the value of a given stock or financial offering is much closer to the line where supply and demand cross. It results in less money being wasted either because the price is too high, or too low. What high speed trading does, in essence, is reduce the delta. Conceptualize a curved line, and then consider a number of equally-spaced rectangles under each approximating the volume of the curve. The more rectangles you have, the more accurate you can recreate that curve. High speed trading simply improves the delta of the supply and demand curves, so that the spread above and below the point where supply and demand cross is very small.
People get confused between high frequency trading and algorithmic trading. High frequency trading carries benefits for both buyer and seller. Algorithmic trading, on the other hand, can and has resulted in huge losses. Like most algorithms exposed to unexpected input, they behave erratically and in unanticipated ways, and once one algorithm goes off the rails, as it were, it can lead to a cascade failure where different financial agents within the system also see something that was unanticipated and then in turn fail. Because these algorithms control a lot of different financial products, these cascade failures can spread and crash entire markets, dozens of stocks, etc.
There are valid criticisms for algorithmic trading. I see none for high speed trading, however. And I do not know why people banter about about "dishonest" trading -- the trades themselves are public record, and only executed because the seller and buyer agreed on a price. There is no coercion or manipulation in the trade itself. The dishonesty in the system comes in over or under-valuation of a financial instrument, or from insider trading. This is external to the trade system itself, and comes from people using information not publicly available, or from deceptive accounting practices.
But here again, the algorithms themselves, nor the computers executing trades, are responsible, and using them is neither dishonest nor something that "only the rich" can afford to do; Sites like e-trade offer consumers a wide variety of tools which can execute high speed trades when various conditions in the market occur, such as the price rising above, or falling below, certain points, and these systems are available for use by the everyday person for reasonable fees. The dishonesty in the system is largely on the CEOs, senior management, and accountants, who collude to profit at others expense.
It has nothing whatsoever to do with the systems themselves, and I really wish people would stop spreading the idea that there's this mythical beast living in data centers in New York gobbling up poor people's money -- those live in the Penthouse, not the basement.
#fuckbeta #iamslashdot #dicemustdie
Kind of, but it's interesting to see how progress was generated before from wars, and nowadays progress comes from the financial world. This is were power is, now.
Slashdot, fix the reply notifications... You won't get away with it...