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."

Comments

Re:Old News

[Anonymous Coward]

Isn't this a repeat?

You can say that again.

But

[rossdee]

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)

Re:But

[Anonymous Coward]

I hope financial trading centers lose 95% of their wealth at 100% of the speed of light. Fuck them.

Re:But

[Anonymous Coward]

Time for somebody to put up some tall, shiny aluminum billboards on rural estate along a certain 734-mile path...

Re:But

[TooMuchToDo]

http://www.nanex.net/flashcrash/ongoingresearch.html
http://www.bloomberg.com/news/2013-11-26/speed-traders-meet-nightmare-on-elm-street-with-nanex.html

Nanex is the one creating this data. They're a small boutique market data firm out of the Northern Chicago suburbs. Their data showed that someone was leaking the Fed data a few seconds early.

Re:But

[Z00L00K]

To avoid this the trade system should delay all transaction with a random factor between 10 and 20 minutes. That should make microtrading completely useless.

Re:But

[Z00L00K]

This isn't the only driver for faster and better networks, but you also need to look who's paying for it - it's all the small time savers that can't afford such a system.

Re:But

[pepty]

Just accumulate all of the orders for one second. At the end of each second match the closest buy/sell orders to each other and execute the trades. Repeat.

Re:But

[Z00L00K]

No, the 10 to 20 minute random delay is to equalize for human traders,

Re:But

[blue trane]

Why assume that the only way this could happen is through capitalism? How many individuals thought of doing this, but didn't, because they were under too much stress working for a little Napoleon boss telling them to do something else so he could secure another country club membership? How much does capitalism retard innovation?

Re:But

[SuricouRaven]

Ask where all the money to fund this is coming from.

HFT doesn't actually manufacture anything or provide a valuable service. It's purely exploiting the numbers for profit, out-trading slower traders. The profits made in HFT are ultimately at the expense of everyone else on the stockmarket who can't keep up. Which likely includes your pension fund.

Re:But

[thegarbz]

This isn't the only driver for faster and better networks

No but it's by far the best funded one.

Re:But

[slick7]

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)

Stealing your money at the speed of fright.

Re:But

[Anonymous Coward]

People don't like HFT because it's profitable, and they perceive things like "it's stealing money from my pension fund". But it isn't. Your pension fund makes a trade every few weeks. Daily at most. If it's an index tracker, and most of them are, then they rejig the portfolio when an index rebalance happens - the day they decide which successful small players come into the index, and which fallen big players are now out. This happens every three months, six months or annually depending on which index it is. I promise you, your pension fund makes more money from your pension fund than HFT firms make from your pension fund.

HFT firms are generally market makers. These are people who have no particular view on the direction the market is about to move, and will give you a price to buy at, and a price to sell at. If they strike a sweet deal with the exchange, then they are obliged to do both and for a fairly high percentage of the time. If they chose, they can also just put a buy order and a sell order in exactly the same way, but the exchange won't give them the same discount.

Either way, with market making, you buy low and sell high, and try not to hold on to the thing long, since otherwise you end up with a risk that it goes up (if you've sold more than you had, known as shorting) or it goes down (if you've bought more than you've sold, like most people invest).

Therefore, the only way you make money is when people trade with you. You need to buy one and sell one a lot, and then the difference between your buy and sell price, known as the spread, is yours to keep. You therefore need two things: to have the best prices, and be at the front of the queue.

Speed is essential for both of these: if you are fast, you can give a good price, because when things turn against you, you can cancel the orders that would now hurt you. Getting to the front of the queue is obviously speed dependent.

So in practice, you end up competing against the other market makers, since you all only make money when someone trades with you. The pension fund, or whoever, actually trying to buy or sell their holdings in the market gets a much better price for doing so.

It's like in an RPG when merchants give you 50% of your loot's value, but sell it back to you for 200%. It's pretty clear where they are making their money, but you're only out of pocket if you keep buying and selling. If your wizard sells off the Stupidly Heavy Sword of Smiting because he doesn't want it, then he still pockets the gold. Likewise, when he buys the Nifty Cloak of Resist Goddam Everything, he gets the benefit from it, no matter what else the merchant buys or sells. If you sit there and keep buying and selling the same wooden bowl from the guy, then yeah, you can get rid of all your money fast. Pro tip: don't do that in the stock market either.

Obviously it's better for you if instead of the mark up being buy @ 50% / sell @ 200%, it becomes 90% / 115% (or whatever, doesn't have to be absolutely symmetrical). The HFT market makers are the dudes who let you get the better prices in the market when you / your pension buy or sell.

Re:But

[bobstreo]

Time for somebody to put up some tall, shiny aluminum billboards on rural estate along a certain 734-mile path...

A series of Mylar Balloons should be sufficient.

Re:But

[fa2k]

This is an interesting point (and new to me, would mod up if I had poitns). It's the same argument that's being cited for scientific experiments when people don't get the "it's cool and important for its own sake, how can you possibly not get that?" argument.

Re:But

[blue trane]

Consider this quotation from the Seattle Innovation Symposium:

“People say the Internet happened quickly. They’re crazy. It took forever”.

- Bob Taylor, Internet and Xerox PARC pioneer

It’s common for business people to point to the 1990s—specifically, to the 1995 Netscape IPO—as the “beginning of the Internet.” This claim is unsupported by fact. The Internet was “born” in 1968, more than 25 years earlier. Internet pioneers, such as Bob Taylor, in interviews express frustration at how slowly business came to realize the importance of a collection of technologies that we now consider extremely valuable. Internet pioneers worked hard to prove the value of the new technologies, but business took a very long time to “get it.”

Individuals tinkering with things produce innovation. Capitalism is slow to uptake most of the good ideas. AT&T resisted the idea of the internet, because it didn't fit in with their business model of telephones.

Re:But

[blue trane]

Seattle Innovation Symposium

Re:But

[blue trane]

Dealers profit from market inefficiency, inserting themselves as middlemen and profiting by pushing prices away from their efficient levels. Why not just let ultimate lenders and borrowers meet with technology, obsoleting the "market makers" raising prices because of their profit-seeking motives?

Re:But

[hot soldering iron]

So you're blaming an economic system for retarding technical development? Odd... I was taught that technical development is a major driver of economic competitiveness. That's why a major indicator of a declining company is if they cut their R&D budget.

I would think that you might assign blame to the individual decision makers. Just because someone is ostensibly playing the same game, doesn't mean that they have the same end-goals. Some people want to build a company to create income for the owner/s, some want to LOSE money as a tax write-off for the parent company, and some are to affect the market in some manner and their individual profit is meaningless.

Re:But

[Anonymous Coward]

You're suggesting that we get rid of stores and their profit-seeking motives, and buy our groceries straight from farmers. Sure, that's possible, but not convenient.

As I tried to explain earlier, they are pushing prices *closer* to the efficient levels, not further away. They need to have the most attractive offer out there in order to get people to trade with them.

Re:But

[khallow]

Why not put in a one year delay so everyone can be on an equal footing with the people who trade once in a blue moon? In my view, there's no reason to equalize trading for human traders.

Re:But

[khallow]

Dealers profit from market inefficiency, inserting themselves as middlemen and profiting by pushing prices away from their efficient levels.

"Pushing prices away"? If you have a "dealer" trading away from the "efficient levels" and a "dealer" trading towards the "efficient levels", I can tell you who will have money at the end of the day and who won't.

Someone who pursues a dumb strategy is going to lose their wealth to someone who isn't.

Why not just let ultimate lenders and borrowers meet with technology, obsoleting the "market makers" raising prices because of their profit-seeking motives?

That's the stock markets in a nutshell. Yet they still end up with market makers.

Re:But

[khallow]

And despite the blazing fast assistance of the US government it took more than a quarter of a century? What makes you think this would have gone slower without government assistance?

I notice, for example, that Stanford University sat for a long time on the world's first ethernet switch, only licensing it six years later to Cisco (who had already stolen the technology). That wouldn't have taken so long, if they had been accustomed to moving technologies from academia to the business world.

Capitalism is slow to uptake most of the good ideas. AT&T resisted the idea of the internet, because it didn't fit in with their business model of telephones.

AT&T was a government enforced monopoly until 1984. I think that dissolution was a huge sea change for things like the internet, cell phone networks, etc.

Re:But

[khallow]

"it's cool and important for its own sake, how can you possibly not get that?" argument

Because there's nothing to "get" about the argument. For me, it's conditional. If I build a table top fusion experiment with my own money, that's cool. When I do it with someone else's money, who had no choice in the matter, and only do it to pull a paycheck, well, that's far less cool.

Re:But

[Mashiki]

Bet you want obamacare, extra health insurance, and a pension too. And suddenly the AC agrees, and discovers that these are funded by "stocks, bonds, and those fucking financial trading centres."

Re:But

[AlphaWolf_HK]

If you look at what the internet was before it became commercial, email would take up to four days to get from point a to point b.

Re:But

[AlphaWolf_HK]

I don't have a pension fund.

Nothing "near" about it

[belg4mit]

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.

Re:Nothing "near" about it

[ModernGeek]

Yes, because it's bouncing off of particles and such, however they are measuring the speed at which the signal meets the other end in a point-to-point scenario.

Which begs the question, how much faster would fiber optics be without air in the line? I imagine it would be negligible, but it would be nice to know.

Re:Nothing "near" about it

[Pseudonym Authority]

Nope, nope, nope. The speed of light is c, the speed of light in various materials is denoted as factors of c (0.65c or 0.99999c).

Re:Nothing "near" about it

[__aaltlg1547]

That's why the big boys lay dedicated fiber.

Re:Nothing "near" about it

[Mr Z]

Raises the question, maybe, but it certainly does not beg the question.

In any case, the speed of light in fiber optics is dominated by the glass or plastic, not any air that might be somehow still be in the fiber. So far as I know, that quantity is zero or close enough at least. For fiber optics to work, you need total internal reflection. To get total internal reflection over a decent range of angles (so that you can actually bend your fiber optic cable), you needs a sufficiently high index of refraction. It turns out that the higher the index of refraction, the slower the speed of light in the medium.

Re:Nothing "near" about it

[davester666]

the next guy up will put up a series of dead-straight tubes, that they can create a vacuum in, then pass the microwaves through the tubes, just to get 97% of the speed of light.

and of course, he will also be able to claim a patent on transmitting the internet through a series of tubes.

Re: Nothing "near" about it

[thermowax]

Amusingly, if you go to the Smithsonian Museum of Technology (iirc) there is/was a display of some Bell Labs stuff where they were (until fiber immediately- at the time- made it obsolete) doing *exactly that*. Little 1cm or so tubes, carefully soldered together, to form microwave waveguides.

I bet you could pick that patent up for cheap... er, maybe not any more.

Re:Nothing "near" about it

[drkim]

no, the speed of light is always the speed of light. the speed up light in a medium is ... the speed... of the light.

You are correct sir.

It's those lazy-ass science folks that always forget to append:

"The speed of light ...in a vacuum. "

Re:Nothing "near" about it

[Trogre]

The speed of light in a vacuum is c. Otherwise you are correct.

Look up cherenkov radiation for a cool example of particles exceeding the speed of light in the local medium.

Re:Nothing "near" about it

[Concerned Onlooker]

"The speed of light ...in a vacuum. "

Talk about lazy. Would that be Hoover, Oreck or Dyson?

Re:Nothing "near" about it

[slick7]

That's why the big boys lay dedicated fiber.

When you say "dedicated" is that with or without NSA knowledge?

Re:Nothing "near" about it

[drkim]

"The speed of light ...in a vacuum. "

Talk about lazy. Would that be Hoover, Oreck or Dyson?

None of those.

I only shine my light inside a Bose–Einstein condensate. That way I can outrun it...

http://www.youtube.com/watch?v=EK6HxdUQm5s

Re: Nothing "near" about it

[maxwell demon]

Ultimately, a coax cable is nothing than a tube with a wire in the middle. So yes, I'd expect that internet signals have already been sent through tubes. Indeed, if you're using cable internet, it's probably sent through a series of tubes right now.

Re:Nothing "near" about it

[ultranova]

Raises the question, maybe, but it certainly does not beg the question.

English is not context-free. Begging the question, for example, is an expression with multiple meanings, the correct one of which must be deduced from said context. You and "grammar girl" are, of course, free to disagree, just as Gene Ray is free to disagree with standard cosmology(?); just don't expect anyone else to care.

For fiber optics to work, you need total internal reflection. To get total internal reflection over a decent range of angles (so that you can actually bend your fiber optic cable), you needs a sufficiently high index of refraction. It turns out that the higher the index of refraction, the slower the speed of light in the medium.

But even if you overcame that problem, the light would still be bouncing between the walls of the core, and thus traveling a longer distance than the mere length of the fiber.

Re:Nothing "near" about it

[swale44]

The speed of light in glass is the inverse of the index of refraction, or about 60%C. Fiber optics work by total internal refraction. The light travels down the core slower than it would in the cladding. When you figure the makeup of the cable and the rout of the cable and repeaters the fastest NYC to Chicago fiber optic IMHO would be 11 milliseconds. Depending on packet size it would more likely be nearer 50 milliseconds.

Re:Nothing "near" about it

[msauve]

Glory! (and by that I meant "there's a nice knock-down argument for you!")

Re:Nothing "near" about it

[Mr Z]

English is not context-free. Begging the question, for example, is an expression with multiple meanings, the correct one of which must be deduced from said context.

Sure, but that's irrelevant. That's how most people make sense of other people who are otherwise not making sense. "Begging the question" has never (correctly) meant "raising the question." Next you'll tell me "I could care less" means "I couldn't care less." Oh, "but context!" is a cheap, meaningless argument.

But hey, feel free to take it up with any of these other folks:

* Dictionary of Modern Legal Usage. If you misuse it in court, I'd love to see you say "But context, your Honor! And for my next argument, I'm going argue about what the meaning of the word 'is' is."
* Zoe Triska: "In the long run, misusing phrases like 'begging the question' doesn't make you sound smarter. It makes you sound dumber."
* The New York Times, which felt the need to come clean on their occasional abuses of the phrase.

Where were we? Oh yeah, context. Sure, from the context surrounding the phrase, everyone will be able to figure out what you meant. And a good fraction of them will know you're using it incorrectly and think less of you for it. As Zoe said above "In the long run ... [i]t makes you sound dumber."

Knock yourself out. I could of gone on irregardless, but I could care less. I won't wait with baited breath for your reply, because for all intensive purposes I'm done. (Context: See how dumb misused English sounds?)

Back to the topic at hand:

But even if you overcame that problem, the light would still be bouncing between the walls of the core, and thus traveling a longer distance than the mere length of the fiber.

That's true, especially for multi-mode fiber. For single mode fiber, the fiber plus cladding act more like a wave guide, because the diameter of the fiber is small relative to the wavelength of the light.

I don't claim to be an expert though. I've just been reading up online.

In any case, the mere fact you have to bend the fiber optics at all implies the light contained therein isn't going in a straight line between repeaters.

Re:Nothing "near" about it

[Mr Z]

Comparing me to Gene Ray is a "nice knock-down argument"? You have some mighty low standards. I don't think anyone reputable has gone in print defending Gene, but just about any style guide you can point to that mentions "beg the question" tells you not to use it to mean "raise the question."

But, thanks for playing.

Re:Nothing "near" about it

[mjwalshe]

Not much :-) its glass or plastic that makes up fiber optics

Re:Nothing "near" about it

[mjwalshe]

BT tried wave guides as an alternate to fibeoptics near the main BT labs in ippswitch there are still roads with test wave guides running along side them.

Re:Nothing "near" about it

[blue trane]

The problem with style guides is that they're stuck in the past. I bet you can find style guides that would criticize your putting a question-mark outside of quotation marks, and then (inconsistently) putting a period within quotation marks. Live by the style guide, die by the style guide!

Re:Nothing "near" about it

[blue trane]

You don't speak for me. I say context in natural language is probably its key characteristic. When someone says "I could care less", the implied negation is understood from the context. Do you maintain that "awful" still means "awe-inspiring"?

Re:Nothing "near" about it

[Mr Z]

Got me there on the punctuation inside/outside the quotes. My fingers trip me up on that one, as I'm a programmer. In most programs, you want the punctuation outside, and in most typeset environments, you want it inside. Mea culpa and big whup.

I'm personally not all that much of a prescriptivist. For example, I think the rules around "whom" and "comprise" were invented to give certain anal retentive sorts their own perverse set of jollies. I'm a big fan of the singular they as well. And sure, many style guides likely have a problem with singular they.

My point isn't that I live and die by style guides because I consider them the be-all and end-all of language. My point is that nobody reputable stands up for Gene Ray, so comparing my observation of misused English to Gene's bizarro rants is not a valid comparison. Rather, it smacks of a straw man argument bordering on an ad hominem attack.

In contrast, you can find many, many reputable sources that stand up for the fact that "beg the question" does not mean "raise the question," just as "irregardless" has never been a valid English word. (Some begrudginly do recognize the common misuse of the phrase in modern English.) Show me someone, anyone reputable backing up Gene Ray. Even if you disagree with all of those resources, you can do so from a different standpoint than "You're entitled to your position just as Gene Ray is." (I realize that wasn't your argument, but it is the main thing I was objecting to.)

If all you have to do to shut down someone you disagree with is compare their opinions to Gene Ray's absurd rants, well then, arguments can be very short indeed. Do we need a new variant of Godwin's Law here?

Re:Nothing "near" about it

[ultranova]

Sure, but that's irrelevant. That's how most people make sense of other people who are otherwise not making sense.

Which would be always. Nothing makes sense except in the context of the listener. English is just meaningless noise otherwise, and even "noise" is an interpretation of oscillations of air.

"Begging the question" has never (correctly) meant "raising the question." Next you'll tell me "I could care less" means "I couldn't care less." Oh, "but context!" is a cheap, meaningless argument.

There is no such things as "correct" english, since there is no one with authority to define it. It's not a formally defined language; thus, it's usage is only "correct" or "incorrect" based on how efficiently a given expression conveys the intended meaning, where "efficiency" refers both to the effort required to parse it and the accuracy of the resulting interpretation. Since "begging the question" can and will be automatically and correctly parsed as either of its meanings by the listener, it is "correct" in all meaningful ways. The same goes for "I could care less".

But hey, feel free to take it up with any of these other folks:

You're the one who brought this up. How about you back up your assertion that the usage is "incorrect", rather than appeal to authority? Because, after all, this is not a court, and neither Huffington Post nor New York Times have any legitimate authority over the english language in general or the language used on Slashdot in specific.

Sure, from the context surrounding the phrase, everyone will be able to figure out what you meant. And a good fraction of them will know you're using it incorrectly and think less of you for it.

A good fraction of people will think less of you for being poor. Does that mean that being poor is "incorrect"?

And let's face it: no matter what, someone will think less of you based on some superficial feature.

Knock yourself out. I could of gone on irregardless, but I could care less. I won't wait with baited breath for your reply, because for all intensive purposes I'm done. (Context: See how dumb misused English sounds?)

Well, you obviously could care less, since your level of care was sufficient for your original post and this reply.

But, if it makes it any easier to you: I'm not actually speaking English. I'm speaking Penglish. By an amazing coincidence, Penglish is just like English except the expression "pegging the question" can mean either "circular reasoning" or "raising the question". Every time you run into a grammatical construct you disagree with, remember: despite appearances, it's not someone actually brutally violating the tender virginal rules of the nubile grammar of your language, it's actually them correctly speaking their own language that just happens to look like English from a distance. Your language is not a harlot who accepts all phrases coherent enough to be comprehended, she's yours alone to love, cherish and protect. Or to be taxidermed and put next to Latin if she refuses...

You linguistical stalker. Someone should report you, you vocabunapper. I bet you lurk on subculture forums too, just waiting to catch a snippet of newborn slang and do unspeakable things to it's unripened commas...

Re:Nothing "near" about it

[Mr Z]

You know, this started off with a one liner, and then you brought Gene Ray into this as almost a pseudo-Godwin. It's clear you feel strongly about begging the question, so beg away.

Re: Nothing "near" about it

[davester666]

Yes, if you redefine the word "tube" to include things that are permanently filled with a solid object, then yes, coax cable would be considered a tube.

Re:Nothing "near" about it

[msauve]

Whoosh!

Re:God knows

[EdIII]

Whatever you're smoking please share.

Improving the lives of ordinary citizens

[Anonymous Coward]

Every day Slashdot should have one story that features a technological advance which could improve the daily lives of ordinary citizens.

This isn't the one.

Re:Improving the lives of ordinary citizens

[locopuyo]

Less delay in communication devices improves the lives of ordinary citizens.

Re:Improving the lives of ordinary citizens

[Anonymous Coward]

Only if not used to take advantage over said ordinary citizens.

Re:Improving the lives of ordinary citizens

[mrbluze]

Less delay in communication devices improves the lives of ordinary citizens.

For example, the gun was an improvement on the bow and arrow, both of which communicate the same message. There are certain uses of this technology that would dramatically improve the lives of ordinary citizens.

Re:Improving the lives of ordinary citizens

[pete6677]

The main purpose of modern Slashdot is to air paranoid stories about "rights online" that border on conspiracy theory alarmism, or sometimes cross the line completely.

Can go somewhat faster...

[Thagg]

Sending a neutrino beam through the earth will be faster than taking the great-circle route across the surface of the earth.

Of course, one would have to send a ridiculously large number of neutrinos to be sure to have them detected, but that's just an engineering problem.

Re:Can go somewhat faster...

[mattie_p]

I wish I had mod points right now, I could not bump this fast enough.

Eventually it will happen, due to the increasing financial costs of not having essentially real time communications between huge centers of finance.

Re:Can go somewhat faster...

[Anubis IV]

Somebody's been reading xkcd's What If series...specifically this one from within the last week.

Re:Can go somewhat faster...

[Anonymous Coward]

A neutrino detector is as much heavy water as you can get, and a commensurate number of photomultipliers. Whatever you gain by not traversing the Earth's surface would certainly be lost in the process of detection.

Re:Can go somewhat faster...

[mjwalshe]

mesons are better :-) well at least at tech L 15 in traveler they where

Re:Can go somewhat faster...

[khallow]

It's actually a fairly obvious thing to think about, especially once you know of the history of experiments that detect neutrinos sent through the Earth.

Dodgy Customers

[mrbluze]

here you'd expect the customers to care most about it:

Yeah, and what customers? Electronic trading supercomputers.

None of this makes a difference to honest trading except to ensure its loss making properties.

Re:Dodgy Customers

[Anonymous Coward]

Traders with ultra fast computers place orders at a fixed price. If no one nibbles immediately and they can't make a profit in a few milliseconds, the order is cancelled. The current system makes "traders" very rich because they "cheat" legally.

Re:Dodgy Customers

[girlintraining]

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.

Re:Dodgy Customers

[Anonymous Coward]

Shilling hard for Goldman Sachs are we?

People get confused between high frequency trading and algorithmic trading.

A distinction without a difference. High frequency trading requires algorithmic trading otherwise it can't match the fluctuations in price.

I see none for high speed trading

Valueless arbitrage. Buyer and seller would have met if not for the middleman leeching off both.

There is no coercion or manipulation in the trade itself.

What about when the traders fuck up, why is it they can ask NASDAQ et. al. to roll the trades back but I can't?

Re:Dodgy Customers

[khallow]

makes a difference to honest trading

But is this trading Truly Scottish? That's the real dilemma here!

I agree with the other replier. If the trading is legal, then it is honest.

Re:Dodgy Customers

[blue trane]

It's honestly taking advantage of market inefficiencies to profit without contributing any value. It was legal for Magnetar to sell RMBS that they had long CDS positions on, without telling the buyer that.

Re:Dodgy Customers

[khallow]

It's honestly taking advantage of market inefficiencies to profit without contributing any value.

That describes most economic activities. If I shop at the local grocery, the local grocery is taking advantage of the market inefficiency of food not automatically being in my refrigerator.

It was legal for Magnetar to sell RMBS that they had long CDS positions on, without telling the buyer that.

Ok, so what? If Magnetar was in the least responsible for those RMBS after the sell, then the CDS would have covered any costs they incurred. It'd also help cover the costs of the RMBS market drying up, should a bunch of RMBS securities fail.

Re:Dodgy Customers

[joe_frisch]

Not quite the same. The supermarket is performing a valuable service of providing a central location where I can purchase most of my food. It provides some level of quality control and acts as a single legal entity that I can deal with if there is a dispute. The supermarket also manages some of the transportation of the food from the locations where it is produced.

Financial trading can be valuable if it re-directs investment money to enterprises with higher productivity. High speed trading does not seem to me to do this in any way, it is simply a zero-sum game where real resources (in high speed computers and data links) are used in a way that does not increase overall productivity. It is not unique in this, bitcoin mining is also inefficient in that it consumes real resources to produce an artificially scarce good to use as a medium of exchange. It would be more efficient (but would lose other advantages) if there were a central repository of free to generate but limited number "coins" that were directly exchanged for money.

Re: Dodgy Customers

[bazorg]

yes, but do they run linux?

Re: Dodgy Customers

[jonbryce]

Yes they do, but I'm not sure what the relevance is.

Re:Dodgy Customers

[khallow]

High speed trading does not seem to me to do this in any way, it is simply a zero-sum game where real resources (in high speed computers and data links) are used in a way that does not increase overall productivity. It is not unique in this, bitcoin mining is also inefficient in that it consumes real resources to produce an artificially scarce good to use as a medium of exchange.

Just because you don't perceive a net value from these activities, doesn't mean that they don't exist. The fundamental indication that value is created is that trade happens.

It would be more efficient (but would lose other advantages) if there were a central repository of free to generate but limited number "coins" that were directly exchanged for money.

Why would that be more efficient? How is the central repository going to get anyone to use their coins? How do we keep the central repository from creating more coins whenever it deems it convenient?

Re:Dodgy Customers

[blue trane]

The basic problem is that market makers exist only because there are inefficiencies in the market. Use technology to bypass them, and prices will be more efficient, because there's no middleman inserting himself into the process, seeking only profit.

Re:Dodgy Customers

[blue trane]

The dishonesty comes in telling the ones you're selling the RMBS to, "It's safe! Look, we have $500 million invested in it too!" while not mentioning that you also have a $2 billion bet against it.

Re:Dodgy Customers

[blue trane]

What's wrong with creating more liquidity? The whole capitalist system is built on an artificial imposition of scarcity of liquidity. Dealers arise because of this lack of liquidity, and profit from the artificial scarcity. The artificial scarcity of money creates a dog-eat-dog mentality where people "innovate" new ways of ripping others off. A large part of this artificial scarcity is due to the automatic attaching of debt plus interest to money created out of thin air by banks. Since the banks don't create enough money to pay back both the loans and the interest, the only way a borrower can pay back his loan is by making another borrower default on his loan.

Instead, end the artificial scarcity of money. The banking system has arisen to meet the demand for liquidity, and they do shady things like shadow banking where they book profits today on instruments they believe are risk-free (because they are rated AAA). UBS is an example, paying huge bonuses on RMBS instruments that subsequently they couldn't sell. Note that UBS didn't suffer; but their mistakes resulted in global repurcussions that caused unnecessary suffering for billions.

So instead of trusting the banks to meet the demand for liquidity, just create it and give it directly to people. Then encourage them to innovate on their own or in ad-hoc collaborations made possible through the unprecedencted communication tool of the internet, with challenges for example. As long as we keep advancing knowledge and technology, we can create as much money as we feel like, because knowledge is what is likely to raise survival fitness the most by better enabling us to predict and adapt to sudden catastrophic change.

Re:Dodgy Customers

[khallow]

Well, that's not the trade itself. And how is that relevant to a case where no one is making deception representations of their actions?

Re:Dodgy Customers

[khallow]

The whole capitalist system is built on an artificial imposition of scarcity of liquidity.

Premise is flawed. That leads to conclusions that are flawed.

The real premise behind advocacy for capitalism is that capital is treated better and is more productive when owned by the private world, the people who use it. You're speaking of currencies as your examples demonstrated which is not inherently a feature of capitalism. You can have a capitalist society with barter or gift economies too.

So let's go to the real question. What is the primary purposes of currency? To be a convenient medium of exchange and a temporary store of value. Scarcity whether natural or artificial is implied as a result of the latter property.

Here's the reasoning. Suppose I have a plentiful currency which has value. Plentiful here means that I can acquire certain amounts at arbitrary low effort per unit of currency (else the currency would actually be scarce). Then I can exchange it for a good of value.

But look at this trade from the point of view of the party providing the good. That party could also acquire more currency from the mechanism providing the plentiful supply.

So from their point of view, the amount of currency in the trade has to be greater than the currency they could acquire by accessing the plentiful source. But the latter can be arbitrarily low in cost, hence there is no incentive to actually bother to sell the good. They can get more just by pulling the magic currency lever.

This leads to a contradiction since the currency was originally assumed to have held value and hence, be worth trading for. Hence, the currency has to be scarce in order to hold value.

So instead of trusting the banks to meet the demand for liquidity, just create it and give it directly to people.

And why is that currency going to have even a scrap of value? You won't have liquidity, if no one can be bothered to trade the currency because it has no value.

As long as we keep advancing knowledge and technology, we can create as much money as we feel like, because knowledge is what is likely to raise survival fitness the most by better enabling us to predict and adapt to sudden catastrophic change.

Why would that happen? Again, flawed premise leads to flawed conclusions. My take is that viable (and scarce) currencies were found to replace the current one and the economy would move on.

Re:Dodgy Customers

[blue trane]

"So let's go to the real question. What is the primary purposes of currency? To be a convenient medium of exchange and a temporary store of value."

No, currency is a ticketing system. See C. H. Douglas, Social Credit:

According to economists, money is a medium of exchange. Douglas argued that this may have once been the case when the majority of wealth was produced by individuals who subsequently exchanged it with each other. But in modern economies, division of labour splits production into multiple processes, and wealth is produced by people working in association with each other. For instance, an automobile worker does not produce any wealth (i.e., the automobile) by himself, but only in conjunction with other auto workers, the producers of roads, gasoline, insurance, etc. In this view, wealth is a pool upon which people can draw, and money becomes a ticketing system. The efficiency gained by individuals cooperating in the productive process was coined by Douglas as the “unearned increment of association” – historic accumulations of which constitute what Douglas called the cultural heritage.

Think of wikipedia, open source, slashdot comments. Why are you exchanging comments with me right now? There is no currency involved. Why can't all trading be like this? I grow food because I have a green thumb, because I enjoy it, because I have everything else I want and what I choose to do is grow food for fun. And/or, a robot grows food.

Currency is a step on the way towards developing the technology for each of us to enjoy maximum freedom, simultaneously. Capitalism, fetishizing scarcity, creates it unnecessarily and slows down the advance of knowledge and technology.

Re:Dodgy Customers

[blue trane]

It's an example of making a trade that's legal, but is dishonest. You said: " If the trading is legal, then it is honest." I provided a counterexample.

If you sell someone a lemon, and you know it's a lemon, and you misrepresent it as a great product, that's dishonest. It may be legal, but it's the kind of perverse incentive and moral hazard that capitalism rewards.

Re:Dodgy Customers

[khallow]

No, currency is a ticketing system.

That's a pretty fancy name for medium of exchange. Again, you assumed a flawed premise, here that a "ticketing system" is somehow different from a "medium of exchange". The obvious glossed over element is that the "ticketing" here is done via trading units of currency for things of value. Thus the currency is assuming its usual role of being a medium of exchange.

Think of wikipedia, open source, slashdot comments. Why are you exchanging comments with me right now? There is no currency involved. Why can't all trading be like this? I grow food because I have a green thumb, because I enjoy it, because I have everything else I want and what I choose to do is grow food for fun. And/or, a robot grows food.

Well, how much food can I get with a great Slashdot post? I can't? Well, there you go. The exchange is happening because we value to some degree either each others' comments or the opportunity to make our own comments. I wouldn't be able to feed myself on Slashdot posts.

Currency is a step on the way towards developing the technology for each of us to enjoy maximum freedom, simultaneously. Capitalism, fetishizing scarcity, creates it unnecessarily and slows down the advance of knowledge and technology.

"Fetishizing scarcity" happens to be the smart move right now. That's because most things are scarce, irrespective of the presence of capitalism.

Re:Dodgy Customers

[Chirs]

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 reason why people don't like it is that they see the high-speed traders as a man-in-the-middle attack.

Hypothetically if both parties were on the network at the same time they could sell to each other at a mutually agreed-upon price. The high speed trader in the middle gets one party to pay a bit more to buy and the other party to accept a bit less to sell, and pockets the difference while doing very little in return.

The real market maker usefulness is when both parties are not on the market at the same time, but that requires them to hold onto the asset for longer, which they generally don't want to do.

"and the traders count milliseconds"

[superdude72]

The fact that the traders count milliseconds is proof that they are just scam artists. Parasites, producing nothing of value. High-speed trading is nothing but a mechanism for funneling money to the rich from everyone else.

Re:"and the traders count milliseconds"

[femtobyte]

but... but.. liquidity! Businesses need to be able to make decisions to respond to market needs on 4.13 millisecond timescales! Imagine how much economic damage there would be if the Job Creators had to wait a whole 6 milliseconds (at fiber-optic speeds) for their decisions to take effect!

Re:"and the traders count milliseconds"

[blue trane]

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:

On Monday, December 30, 1985, Fischer gave the presidential address to the American Finance Association which was meeting in New York, and stunned his audience with the following words:

“We might define an efficient market as one in which price is within a factor of 2 of value; i.e. the price is more than half of value and less than twice value. By this definition, I think almost all markets are efficient almost all of the time. ‘Almost all’ means at least 90 percent.”

Here we can detect, I think, the influence of Fischer Black’s friend, Jack Treynor, who had originally introduced him to his own version of the capital asset pricing model but gone on to a life in the markets rather than academia, and in that life had produced the dealer model that we have been using in previous lectures. Think about what the dealer model says. It says, just as Fischer relates, that the price of a security fluctuates within bounds set by the value based trader, bounds that can be rather far from true value. At any moment in time, the price of the security will lie somewhere within those bounds, exactly where depends on the inventory of the dealer.

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.

Re:"and the traders count milliseconds"

[Anonymous Coward]

I know right? I love that bullshit liquidity argument. There are no worthwhile liquidity gains from doing shit at that speed, vs even 10x or 100x of that. It's fucking bullshit and I can't help but snort with derision whenever I see some wallstreet dickhole or wallstreet dickhole apologist actually try to claim that shit with a straight face. It's fucking laughable.

Re:"and the traders count milliseconds"

[diamondmagic]

I appreciate Black's contributions to our understanding of modern pricing, but here I have no clue what he's talking about. The basis of all modern economics since Carl Menger is the law of marginal utility, which implies the subjective theory of value. I can't tell what is meant by "value" here but it's certainly not in the meaning of virtually all economics for the past century.

That's not the definition of efficiency, since efficiency too is subjective... Black is describing one possible method of evaluating efficiency, which like any, is completely arbitrary.

Re:"and the traders count milliseconds"

[khallow]

Parasites, producing nothing of value.

Liquidity and all the other usual counter-reasons you hear, but fail to recognize.

High-speed trading is nothing but a mechanism for funneling money to the rich from everyone else.

Yea, right. Don't do market orders or stop loss orders. Just do limit orders. Now, you're immune to high frequency trading, because you aren't doing high frequency trading yourself.

Re:"and the traders count milliseconds"

[blue trane]

Quoting from Mehring's Notes for Lecture 10, in Economics of Money and Banking, Part One:

In financial theory, it is common practice to assume perfect arbitrage, and hence also
complete liquidity. Assets are assumed to trade at their fundamental value since any other price
would create an arbitrage profit opportunity. In effect, the world that the finance theorists
imagine is a world in which the VBT outside spread is very very narrow, so there is no room and
no need for dealers. In the real world, the outside spread is quite wide, dealers offer prices inside
that spread but the prices can deviate very far from fundamental value. That is the world Fischer
Black was talking about in his infamous presidential address to the American Finance
Association when he said that he thought markets were efficient, meaning price was usually
within a factor of two of true value.

We can understand what Black is saying by referring back to the Treynor model.
Suppose that fundamental value is the price that dealers would quote if their inventories were
exactly zero, so they are not exposed to any price risk. The Treynor model then shows how
market making by dealers pushes price away from fundamental value, on one side or another, by
more or less depending on the size of the outside spread and the dealer’s maximum long and
short position limits. Standard asset price theory abstracts from this effect, in effect treating the
outside spread as collapsed around fundamental value, so there is no need for dealers. Some
markets are close approximations to this, but others are not; some times are close approximations
to this, but others are not.

If efficiency is completely arbitrary, then the prices that high-frequency traders even out, which the post I was responding to hailed as the legitimate foundation of capitalism, are based on what? They're just pushing prices around to make a profit. Why is that "legitimate"?

Dealers profit from the general lack of liquidity. Wouldn't it be better if a "public option" existed, which provided liquidity without a profit motive? You wouldn't have to regulate dealers; just provide another option which worked in the public interest, pushing prices lower than dealers alone will.

Re:"and the traders count milliseconds"

[blue trane]

Quoting from Lecture 10 Notes:

The modern theory of finance is built on the assumption of perfect liquidity, so that prices can be
fully efficient. It is supposed to be arbitrage that creates perfect liquidity by entering to take
advantage of even the smallest deviation. To say that liquidity is perfect is to say that liquidity is
a free good.

But in a fully efficient market, arbitrage would not be profitable since all bets would be
fair bets. So position takers would not make money. And if position takers do not make money,
they will not compete so much for the market-making business.

So let's make liquidity a free good. Then you don't even have to regulate dealers. They'll just wither away...

Re:"and the traders count milliseconds"

[blue trane]

Why should liquidity be kept artficially scarce?

Re:"and the traders count milliseconds"

[khallow]

Why should liquidity be kept artficially scarce?

Any means for the market to extract revenue from trade will result in trade inefficiencies. So stock markets are indirectly keeping liquidity artificially scarce in order to increase revenue from providing faster market access.

Re:"and the traders count milliseconds"

[Air-conditioned cowh]

The fact that the traders count milliseconds is proof that they are just scam artists. Parasites, producing nothing of value. High-speed trading is nothing but a mechanism for funneling money to the rich from everyone else.

It adds a whole new meaning to, "pulling a fast-one"!

Re:"and the traders count milliseconds"

[fatphil]

No disagreement. I used to view them as harvesting noise. I now view them like Maxwell's Demon, mostly because this high speed trading permits them to open the valve more precisely.

Re:"and the traders count milliseconds"

[Anonymous Coward]

Err, no. Dealers profit by pushing prices *towards* the efficient level. That's buy low, sell high.

Re:"and the traders count milliseconds"

[blue trane]

I have a completely different viewpoint: risks should be taken in the lab, not in finance. Quoting Lee Smolin: "As Dick Feynman once said to me, you have to be prepared to make every possible mistake and have every possible stupid idea before you can have the right idea." Finance wants to value the ideas in terms of money, payoff, etc. Finance (and economics) wants to throw out ideas without testing them. But the real goal. the way science progresses and knowledge advances, is to figure out a way to test all ideas in the lab.

Finance may help us to get to the point where we have developed the tools that allow us easily to test any idea. But I think it will take longer than if we abandoned the idea that money measures value, and worked directly on developing new technology instead of working on how to finance it.

Re:"and the traders count milliseconds"

[blue trane]

I quote again from Mehrling's Lecture 10 Notes:

Suppose that fundamental value is the price that dealers would quote if their inventories were exactly zero, so they are not exposed to any price risk. The Treynor model then shows how market making by dealers pushes price away from fundamental value, on one side or another, by more or less depending on the size of the outside spread and the dealer’s maximum long and short position limits. Standard asset price theory abstracts from this effect, in effect treating the outside spread as collapsed around fundamental value, so there is no need for dealers. Some markets are close approximations to this, but others are not; some times are close approximations to this, but others are not.

Re:"and the traders count milliseconds"

[blue trane]

I think you're assuming that all dealers have zero inventories and are not exposed to price risk. But real dealing gets messy because they're working within an outside spread, which gives them a lot of room to maneuver within. So when dealers suffer a liquidity crunch, for example, they push prices away from efficient levels. That's when the central bank can step in and provide a backstop, supporting the outside spread, and preventing gross price distortions. The point is that dealers are not always able to provide efficient prices. Depending on their positions they can often push prices away from fundamental value.

So for example when Libya was in turmoil, oil shot up to many times its fundamental value. Why? Groupthink, emotion, fear, etc. all played a role. Prices went way out of proportion to their efficient levels.

Re:"and the traders count milliseconds"

[diamondmagic]

The article I link to points out efficiency has many different usages even within economics. If you mean market-clearing or liquidity, I'd say that instead.

I'm not sure how you provide "liquidity without a profit motive", or how it is relevant to the discussion, but the idea is absurd. A person selling a product does so because it necessarily benefits them in some way. Markets are discrete, not continuous, even if our math is.

Re:God knows

[Anonymous Coward]

That's Terry Davis. He's not smoking anything. He has schizophrenia. (Seriously, look him up; God sings songs to him about the CIA and Indians through his OS.)

Blimp in Middle attack?

[runeghost]

Step 1: Intercept the transmisson Step 2: ??? Step 3: Profit!

News? Well, interesting perhaps...

[rusty0101]

Considering the Nova episode 'making things faster' with David Pouge as the host presented this over a month ago, and they have production lead time delayse amounting to months, I'm with the people suggesting that this is a repeat. And hardly qualifies as 'news'.

That said, cool.

Also noted in the Nova episode was that the physical path that the fiber-optic route takes is going to be longer than the path that the microwave route takes.

If they are not doing it already, I would suspect that the next step will be to move the repeater electronics up to the microwave dishes at the intermediary locations. My experience with telcom is that this is usually housed in the shelter at the base of the towers, however if they can locate it with the dishes it will eliminate a path distance of at least twice the sum of the elevations of the dishes, divided by the velocity factor of the media they use to connect those, (roughly 1 for dry waveguide, and usually between .6 and .9 for different varieties of co-ax media.) It's not a lot, but if they are looking to eliminate every possible delay, that's got to be in their plans.

Re:News? Well, interesting perhaps...

[Anonymous Coward]

Already done some years ago. Dish has redundant modules on the back that only need power and cat 5 for ip down. Cross connect across tower legs on same tower to the next dish and go

Cloud in Middle attack

[slew]

Step 1: Determine when a competing trader is in the most vulnerable position
Step 2: Seed clouds to start a weather pattern that reduces bandwidth of the microwave relay
Step 3: ???
Step 4: Profit!

Re:Cloud in Middle attack

[maxwell demon]

Step 1: Determine when a competing trader is in the most vulnerable position
Step 2: Seed clouds to start a weather pattern that reduces bandwidth of the microwave relay
Step 3: ???
Step 4: Profit!

"How did you manage to make so much money?" — "Well, I made good use of the cloud."

Re:God knows

[toygeek]

Its the latest literary craze: eat two cans of alphabet soup and then forcefully vomit it onto a high contrast flat surface, take a high resolution photo of it and then run it through OCR from 1999. Tada! Instant classics the whole family can enjoy.

Leeches

[Anonymous Coward]

Lets be clear, none of these microtraders actually add anything to the economy. All they do is take a percentage cut from every transaction they manage to wedge themselves into.

Leeches all of them.

Re:Quantum Entanglement Please.....

[grcumb]

...so I can write "first".

I already did that, only I had to go and look, and it turned out I didn't....

... in this universe.

Local silicon beats microwave everytime

[Anonymous Coward]

The high speed trading field is bein geviscerated by the placement of FPGA based devices on fiber leaving the building. There's no point ot a "high speed link", with all the insanity involved in that technology, when you can program a sophisticated monitor and sales control tool right outside the stock exchange.

Now, the center that analyzes the history of such data and builds your models of how to respond can be in another state and pre-program the FPGA. But these devices are already being used: It took me twenty minutes to stop laughing at a job interview with one such company: I was unsure just which of my talents they wee interested in until I noticed a display of such devices, and realized they wanted me to assist in their migration to a much, much cheaper part of the country for all their modeling and analysis tools, and just leave a box or two of Nallatech FPGA cards at the New York Stock Exchange.

It was amazing how fast they put the NDA in front of me when I explained the implications to their core business model, and started tying it to the repercussions of moving *away* from the human contacts that provide back channel, essentially insider knowledge, when the analysis boxes are no longer in the data center with your own staff on site. My speculative "if you need to tune these models manually, you need to secure the information, and who is allowed to change that model? how do you manage the provenance of such orders" discussion apparently set off alarm bells that urged them to get me under an NDA, whether or not they ever made an offer. Life got really adventuresome when I refused to sign an NDA without an offer on the table.

Re:Local silicon beats microwave everytime

[smellotron]

There's no point ot a "high speed link", with all the insanity involved in [FPGAs]

Do that for a day, and then come back and tell us how you fared. Local silicon in New York doesn't do squat when the best information is coming from Chicago, London, or Tokyo.

Mod parent up: it's called VELOCITY FACTOR, folks!

[storkus]

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

Or even faster

[aliquis]

... faster than light!

http://en.wikipedia.org/wiki/Faster-than-light_neutrino_anomaly .. though not really :)

All this effort for parsitism

[dbIII]

It looks like another symptom of why China is going to kick our ass. All this effort put into getting crumbs from what other people do instead of doing something tangible.

Re:All this effort for parsitism

[blue trane]

What does China do again? Provide cheap labor? 3D printing will eliminate that advantage.

Re:All this effort for parsitism

[pepty]

What does China do again? Provide cheap labor? 3D printing will eliminate that advantage.

China Provides cheap labor, lax environmental and zoning restrictions, entire cities organized around particular industries ... 3D printing is a very expensive and very slow way to manufacture pieces of plastic or metal in small quantities. If it was a fast and inexpensive way to make things by the gross they would make things that way in China. Instead they make 3D printers (stepper motors, motor drivers, microcontrollers, wires and connectors, etc) and sell them to us.

Re:All this effort for parsitism

[blue trane]

3D printers can print themselves...and then you eliminate transportation costs.

Re:All this effort for parsitism

[thegarbz]

What does China do again? Provide cheap labor? 3D printing will eliminate that advantage.

Yes.

Oh and they also educate themselves at a faster rate than the US, and they fill top positions with engineers rather than MBAs and Lawyers, lately they've been a cheap engineering workhorse doing their best to displace western products from the shelves (you don't think those cheap local companies actually do any engineering do you?) You know the best part? We're the ones training them. The number of overseas Chinese students who return home post studies is simply mind boggling. They don't take their EE degrees home and sit at a production line.

But feel free to ignore it, just like the world ignored India's efforts to teach everyone English and IT, until most of the western world started outsourcing these services effectively eliminating the concept of a local call centre.

Re:All this effort for parsitism

[joe_frisch]

3-d printing is more expensive than conventional production methods for large volume production. Its not clear yet at what volume it will be competitive, but I expect that it will mostly be used for small / semi-custom production. (which is quite useful).

China does lots of things besides providing cheap labor. The have infrastructure (roads, rail, electricity, etc), and laws that make it efficient to do large scale production, though arguably at the expense of quality of life for the workers. (I say arguable because the income from the efficient production has improved the overall standard of living substantially, not clear how to balance against the substantial negative effects).

Re:All this effort for parsitism

[maxwell demon]

Please show me a 3D printer that prints microcontrollers. I also doubt that you can print a stepper motor.

Re:All this effort for parsitism

[DNS-and-BIND]

Getting crumbs from what other people do? Parasitism? Sounds just like China to me. They copied their entire economy wholesale, down to the faults.

Re:All this effort for parsitism

[pepty]

When industrial 3D printers can print sets of legos 1, at the same tolerance (10 micron) as legos made from a mold, 2, cheaper than wholesale legos made from a mold you'll definitely have a point. Until then I think we'll see a much bigger impact from using 3D printing to make molds, prototypes, and one offs than from making actual consumer items. And I know the argument is that people will have a printer at home or use a printing service, thus cutting costs by getting rid of a long chain of transport and middle men. But people don't actually spend much on things that are purely 3D printable, and when things break it's usually not just a user-replaceable 3D printable plastic part at fault.

This is news?

[lukpac]

Story from almost a year ago:

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

Hot Pocket in the Middle Attack

[Calavar]

Step 1: Rent an apartment across the street from the stock exchange
Step 2: Cook delicious hot pockets in the microwave while the interference messes with the traders' signals
Step 3: ???
Step 4: Eat delicious hot pockets

Re:Hot Pocket in the Middle Attack

[elashish14]

Use an aluminum foil antenna to direct microwaves to any given pole and that should cause sufficient interference to break this little scheme.

I wonder how long before those animals resort to oding something like this... in the name of profit...

What's next for fiber?

[evilviper]

So now that the latency of light through glass is undeniably a costly limitation, what's next for fiber optics?

You'll still need the total-internal reflection whatever the material, but perhaps something with a refraction index closer to c? Water-filled tubes? Hollow tubes filled with a gas?

NY to Chicago is a pretty short run. While everyone is ranting about the economic/political aspects of this move, we'd all benefit if intercontinental telecommunications links had 50% lower latency.

Re:What's next for fiber?

[femtobyte]

we'd all benefit if intercontinental telecommunications links had 50% lower latency.

How so? I can't recall any personal harm from overseas communications latency taking a few extra milliseconds; I still seem to be able to get all the data I need from over yonder. Besides oligarchical leeches manipulating markets abstracted from any practical or beneficial use, how do the rest of "we all" benefit from latency reductions beyond reasonable-for-human-time-scale-interaction latencies?

Re:What's next for fiber?

[putaro]

Line of sight communications means you need relays somewhere to go around the curve of the earth. We already cut huge latencies off intercontinental links by going from satellite links to fiber optics.

Re:What's next for fiber?

[TuringCheck]

Line of sight communications means you need relays somewhere to go around the curve of the earth. We already cut huge latencies off intercontinental links by going from satellite links to fiber optics.

Or... start drilling!

Re:What's next for fiber?

[evilviper]

I can't recall any personal harm from overseas communications latency taking a few extra milliseconds;

It generally works in the opposite direction... Folks outside the US have very tempting hosting services in the US, but the latency makes using the services quite unpleasant.

I thought it was pretty obvious... If you've ever SSH'd into a server over-seas, you've seen some nasty lag due to latency. For quick jobs you tend to tolerate it and do as much locally as possible, because it's pretty painful. If you've ever called someone on the other side of the planet, you've faced some pretty high latency that makes two-way conversation awkward. Similarly, if you take the "Web 2.0" sites that make extensive use of javascript bits all over the place, and put them on the opposite side of the planet, the added latency makes the site painful to use.

There could be a lot of benefits from lower-latency fiber optics, and this project only makes it clear there is demand for it.

Re:What's next for fiber?

[evilviper]

This is utter nonsense. Microwave communications are line-of-sight and only minimally regulated. And just like fiber optics, you can point as many lasers as you want, from tower to tower, for maximum throughput.

Re:Old News

[hcs_$reboot]

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.

Re:Mod parent up: it's called VELOCITY FACTOR, fol

[Nemyst]

Light speed, without any qualification after it, is generally accepted to mean c, celeritas. Adding "in a vacuum" is a pointless waste of space and only serves to confuse people who do not know, nor care, about the difference.

It's amusing though how there's always at least one pedant "correcting" the article or summary in each and every article with that short-form term in it.

Oh the possibilities

[putaro]

Hmmm...Time to take a weather balloon and a big sheet of aluminized mylar on a frame and let them out right in the line of sight and do something that makes money when their communications slow down.

Re:Oh the possibilities

[pepty]

Hmmm...Time to take a weather balloon and a big sheet of aluminized mylar on a frame and let them out right in the line of sight and do something that makes money when their communications slow down.

Like charging $10k per minute to not drop microwave chaff in their line of sight? I like it.

Re:Oh the possibilities

[putaro]

I was originally thinking something complicated with the stock market but straight extortion is just so much simpler!

Re:Why? Because micowaves aren't "light"?

[amRadioHed]

Not pedantic, wrong. It seems obvious to me that what they mean by a fraction of light speed is how far they are from the theoretical fastest communication speed from point a to point b where the speed of light is the only delay. Fiber has many additional delays caused by numerous repeaters along the way and the circuitous routing of the cable. They have improved on this with a more direct path and fewer repeaters.

Neutrino Factory

[joe_frisch]

Well there is a plan to build a neutrino factory that would create directional highly intense neutrino beams. While the goal is neutrino physics, it could be used as a transmitter. Its only ~$1B, maybe worth it to the financial guys. If they pay, they can have have 50% of the beam time.....

Re:Google Jobs

[pepty]

Your neighbor must have a speed of light (in air) connection to the stock marketz! Please send me your brochure.

Re:Mod parent up: it's called VELOCITY FACTOR, fol

[nbauman]

It's amusing though how there's always at least one pedant "correcting" the article or summary in each and every article with that short-form term in it.

I literally want to kill those people.

Clueless article

[Bazman]

Ever see two ships using those flashing lamp things to talk in morse code? They are communicating at the speed of light.

Data transfer speed is in baud, or bps, or Gb/s, or Encyclopedia Britannicas/s - never metres per second.

Re:God knows

[anubi]

I can't help but believe what you found were honeypots designed to accumulate data on people interested in bitcoin. I am sure your IP was logged and is in some database somewhere.

God knows how many databases my IP got in when I was searching for cracks and hacking tools about ten years ago when I got quite interested in the hacking scene as a result of catching a virus and was insanely curious on just how they did that.. I ran across lots and lots of sites which looked good from the search engine, but when I got there, there was nothing of value. Meaningless drivel and a lot of links to yet more meaningless drivel... or like an old saying "lots of twisty passages" that go nowhere.

Trading satellites

[joe_frisch]

If the trading computers were located in satellites in low earth orbit, they could arrange to always have one withing a few hundred miles and line-of-sight to each of the big exchanges.......

Finally a way to fund the space program.

Microwaves? So old school.

[sjwt]

Boring..

Tell me when they loop up enough fiber optic to use quantum entanglement for instantaneous transmission.

Why not quantum entanglement?

[nbritton]

Why don't they use quantum entanglement to transmit information in real-time? The bandwidth needed is minimal, for a real-time ticker you really only need a few details, such as price and volume. If you figure 256 bits (32 bytes) per transmit, you could track anything you want in real-time down to the millisecond for 32 KB/s. I'd imagine this is achievable using quantum entanglement?

Re:Why not quantum entanglement?

[skovnymfe]

Not yet, but I can guarantee someone out there is working on it.

Re:Why not quantum entanglement?

[nbritton]

Why don't they use quantum entanglement to transmit information in real-time? The bandwidth needed is minimal, for a real-time ticker you really only need a few details, such as price and volume. If you figure 256 bits (32 bytes) per transmit, you could track anything you want in real-time down to the millisecond for 32 KB/s. I'd imagine this is achievable using quantum entanglement?

You can do it with 128 bits if you only track stock symbol and price, sampling at 50 times a second, a 32 KB/s QE link could track 40 stocks in real-time. I envision some type of asynchronous system, with the return being send via traditional communications technologies.

Re:Why not quantum entanglement?

[the_other_chewey]

Why don't they use quantum entanglement to transmit information in real-time? The bandwidth needed is minimal, for a real-time ticker you really only need a few details, such as price and volume. If you figure 256 bits (32 bytes) per transmit, you could track anything you want in real-time down to the millisecond for 32 KB/s. I'd imagine this is achievable using quantum entanglement?

No.

Quantum entanglement doesn't work that way: Information transmission via the channel you
imagine is impossible (at least as far as we understand physics today). Yes, measuring the
state of an entangled quantum object instantly determines the state of its remote counterpart.
No, you can't use that to transmit information faster than light.

Because:
The measurement you end up with is random. There is no way to force the state to be one
of the two possibilities, and therefore you have no influence over the state of the remote object.
You randomly send either a 1 or a 0. Not too useful.


And you can't save it by using "just look if the state has been determined" as the data channel:

• – There's no way of knowing that without measuring.
• – Even then, you don't know if what you measure has been determined by a prior
  remote measurement on the other object, or if you just turned the channel around.

All those "quantum channels" in cryptography etc. always need another channel transmitting
(meta)data to actually do something useful. This of course makes the whole transmission process
slower-than-light.

Re:Why not quantum entanglement?

[smellotron]

sampling at 50 times a second

Using quantum entanglement to achieve zero transmission delay, and then only looking at it once every 20 milliseconds? You may as well just use fiber, as half of the time you will still receive information ahead of a polling-based QE system. Now, the benefit for the QE system increases as the fiber distance increases, so your idea still makes sense for mutli-planetary HFT. Just... not between Chicago and New York.

Re:Old News

[Mister Liberty]

progress comes from the financial world

Twisted definition of 'progress'.
Where have you been the last couple of years?

Entrapment

[dwarfking]

But didn't we see that if they are using systems like this that a thief could steal the money by intercepting the transmission?

Re:how civilization falls

[terryk29]

1. end income, sales, payroll taxes 2. fund the government at all levels through a wealth/property tax on all resources of value (including government protected intellectual property)

I've wondered about doing the above for the simple reason of fairness: would it not make tax evasion more difficult? If taxes are a necessary evil, I'll pay my fair share, but it really bugs me when I see others ducking them. It's not hard for a contractor to do "cash" deals, or pay someone under the table, but you can't avoid a property tax since it's recorded at the deed office (or also the patent office, etc.).

And on that note, why should we try to insert the tax collector into every economic transaction? Although that very concept offends those with a Libertarian streak, aside from that it simply seems inefficient. (Down to retailers charging and redeeming sales taxes, to entrepreneurs doing our increasingly complicated taxes*.)

Sure, I'm probably being simple-minded and ignorant about tax policy; I've never studied economics (yet), but I do find it fascinating. Were there reasons we generally moved away from wealth taxes (aside from the fact that the wealthy didn't like them)?

*When families or organizations need more space, they'll have to acquire it. Sure, higher property taxes will incentivize us to rent, but our need for space will be met by someone who's willing to own (and indirectly pass on to us some of the tax hit). OTOH, are current systems of having a wide net of taxes on everything seen as advantageous since we aren't putting a lot of "friction" in any one place?...

Efficient markets

[sjbe]

If efficiency is completely arbitrary, then the prices that high-frequency traders even out, which the post I was responding to hailed as the legitimate foundation of capitalism, are based on what?

Efficient market theory, at least in its strong forms, is a ideal world model that doesn't actually exist in the real world. It presumes rationality, correct interpretation of information (on average), uniform distribution of information and other things that don't really happen much of the time. However it is a useful model at times and does explain at least some of what is going on. Basically it is a description of price differences that arise due to the temporal lag in information distribution. High frequency trading is an attempt to explicitly profit from this gap by being first to notice and act on information disparities. Nothing wrong with that in principle since price corrections based on information are exactly how every market works and how one makes a profit trading. The thing that is scary about HFT is that it happens so fast that big problems can occur faster than the ability to take action to mitigate the problems.

Dealers profit from the general lack of liquidity.

There are numerous ways to profit from stock trading most of which are in no way solely dependent on liquidity. In fact without sufficient liquidity it is impossible to trade and thus one cannot make a profit. You can't buy or sell something if there is no liquidity. However there is only one way that I am aware of to make consistently above average profits and that is to have an informational advantage. That is to interpret the information better (a better model), be able to act on the information faster (HFT) or to have information not universally available (think insider trading).

Wouldn't it be better if a "public option" existed, which provided liquidity without a profit motive?

Like what exactly? I've got a masters degree in finance and I'm not aware of any such mechanism.

Re:Efficient markets

[blue trane]

Like a basic income, financed by a balance-sheet entry. Consider, for example, Richard Cook's article, An Emergency Program of Monetary Reform for the United States:

A Social Credit system would be implemented through simple bookkeeping. The funding of the National Dividend would be drawn from a national credit account which would include all factors which give rise to production costs and create new capital assets.

No need to regulate dealers. Simply give everyone a choice whether they want to enter the market and do something like deal, or not. With a basic income, an individual can pursue his own ideas, taking risks in the lab, rather than in finance.

Re: Old News

[ceoyoyo]

How is this progress? We've had microwave transmission networks for decades. This is an example of a silly broken system causing people to waste resources.

Re:God knows

[FatdogHaiku]

Snot dogs softly waffle lizard skinned laundry ladies.

Microseconds, not millis

[Obvius]

"The traders count milliseconds", that's three orders of magnitude out. Single-digit microseconds are considered significant in low-latency algo trading. A useful ballpark figure is one microsecond is roughly 300 metres at lightspeed in vacuum (practically no different to the speed in air) but signal propagation in copper and glass is roughly two thirds of that - about 200 metres.

Re: Old News

[CurryCamel]

Cutting down the ping from 6.04ms to 4.13ms. How is this not progress?

Re:how civilization falls

[PPH]

the solution is fairly simple but has to be implemented world wide (or at least in all of the western world to work)

And therein lies the flaw in your plan. If anyone refuses to follow it, they end up attracting capital (and the means of production) to their jurisdiction. Something like this was tried (a global economic/political system under one authority). But the Soviet Union and its Communist Party effectively shut down in 1991.

Re:God knows

[evilviper]

I might be inclined to give Terry a pass, except his rants took a very dark turn, and racism can't be written off as a symptom of schizophrenia:

http://slashdot.org/comments.pl?sid=4437621&cid=45402353

Re: Old News

[K. S. Kyosuke]

Only if you're a gamer. Then again, they are trying to game the system, of course.

obvious waste of resources

[PJ6]

A mandatory, random, 10-20 second delay for each trade would completely eliminate the incentive to do this.

Re: Old News

[ceoyoyo]

Some company goes out and puts some off the shelf microwave transmitters on some rooftops, for their own private use. They get faster ping times with their dedicated connection. How is that progress?

Developments like this

[Burz]

...make Finance look more like a death grip than a profession.

Re:Old News

[kmoser]

Isn't this a repeat?

No, it's a repeater.