High-Speed Firms Now Oversee Almost All Stocks At NYSE Floor (bloomberg.com)

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High-Speed Firms Now Oversee Almost All Stocks At NYSE Floor (bloomberg.com)

Posted by Soulskill on Wednesday January 27, 2016 @04:54AM from the robot-economy dept.

An anonymous reader writes: Barclays, one of the biggest banking and financial services firms in the world, has sold its business on the floor of the New York Stock Exchange to Global Trading Systems. This is significant because it marks a transition between human-based trading and high-speed trading. Now, humans on the NYSE floor have more of a supervisory role, making sure the automated systems don't go haywire. Barclays has been around for hundreds of years; GTS was founded in 2006. "There used to be dozens of specialist firms, as designated market makers were once known, at the NYSE floor. But profits from trading U.S. stocks dwindled, making it difficult to serve as market makers without automation. Although GTS, Virtu, IMC and KCG employ human traders at the floor, their businesses are driven by some of the industry's most sophisticated computer systems."

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High Speed Post! by Anonymous Coward · 2016-01-27 04:58 · Score: 1, Funny

Ha
The "Floor" was always a kludge by xxxJonBoyxxx · 2016-01-27 05:00 · Score: 3, Funny

The "Floor" with its slow water-based life forms making noises and moving their appendages was always a kludge. If stock trading could have arrived on earth fully formed, it would have been with frictionless trading and marketing pricing instantly available to everyone to act upon immediately. We're finally getting there.
1. Re:The "Floor" was always a kludge by oh_my_080980980 · 2016-01-27 05:05 · Score: 1
  
  LMOL you don't have a clue do you. "available to everyone" that's funny.
2. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 05:11 · Score: 3, Insightful
  
  Unfortunately, "market" price does not mean what it sounds like (ie, the value of something _right now_); it includes future speculation. This introduces a positive feedback into the system, with a time constant related to the delay in trading action. So the random non-trivial delay in trading that humans provides is good for preventing huge swings. The faster the trading, the worse the swings will get.
3. Re:The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 05:16 · Score: 0
  
  and marketing pricing instantly available to everyone to act upon immediately. We're finally getting there.
  No, not at all. High-frequency trading is all about not having price transparency for all, but having a few actors with the ability to trade and manipulate prices while normal traders have no clue or visibility on what is going on. Think about how The Flash can interact with ordinary people, that is similar to how HF traders can interact with other traders.
4. Re:The "Floor" was always a kludge by ShanghaiBill · 2016-01-27 05:29 · Score: 1
  
  "Normal traders" have NEVER had direct access to the exchange. In the old days, an investor would use a broker to execute the trade manually. Today, all of the trades are executed by HFT. There is no conflict between manual traders and HFT because there are no manual traders. The only difference to retail investors is that transactions prices today are far lower.
5. Re: The "Floor" was always a kludge by ooloorie · 2016-01-27 05:34 · Score: 4, Interesting
  
  Unfortunately, "market" price does not mean what it sounds like (ie, the value of something _right now_); it includes future speculation.
  Predictions about future returns are part of "the value of something right now", so your distinction makes no sense.
  
  This introduces a positive feedback into the system
  No, it doesn't. It introduces delays and dependencies on the future, but people make both kinds of errors on stocks.
  
  with a time constant related to the delay in trading action. So the random non-trivial delay in trading that humans provides is good for preventing huge swings. The faster the trading, the worse the swings will get.
  In fact, the opposite is true mathematically: longer delays tend to produce bigger swings, for the simple reason that a system can go off the rails longer before the market corrects it.
  But there's an even more basic error in your reasoning, namely the assumption that market swings are bad or that we should adopt policies to reduce them.
6. Re: The "Floor" was always a kludge by ShanghaiBill · 2016-01-27 05:36 · Score: 4, Interesting
  
  The faster the trading, the worse the swings will get.
  The SEC's investigation into the 2010 Flash Crash, came to the exact opposite conclusion: that HFTs have a stabilizing influence on markets by providing liquidity. One of the reasons for the crash was that when prices moved outside of the expected range, many HFTers stopped trading, and the resulting drop in liquidity, and rise in spreads, caused some investors to panic.
7. Re:The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 05:41 · Score: 2, Interesting
  
  Your trades as an Etrade customer are not at all executed as "HFT" in any way that gives any meaning. You don't have access to anything close to the speed and price information that real HFT actors have.
8. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 05:47 · Score: 0
  
  The faster the trading, the worse the swings will get.
  The SEC's investigation into the 2010 Flash Crash, came to the exact opposite conclusion: that HFTs have a stabilizing influence on markets by providing liquidity.
  The SEC is a corrupt organization that is completely full of shit.
9. Re:The "Floor" was always a kludge by ooloorie · 2016-01-27 05:50 · Score: 1
  
  but having a few actors with the ability to trade and manipulate prices while normal traders have no clue or visibility on what is going on
  Yes, and why is that? Because governmental financial regulations make it next to impossible to create new markets in securities (or any other kinds of financial services). That is, the primary effect of those financial regulations that ostensibly exist to "protect" us is to create government mandated monopolies. It is no wonder that people like Hillary are in bed with Wall Street.
  The fact that these government-created monopolies happen to use high frequency trading is pretty much irrelevant; before HFT, they'd just charge vastly inflated prices for trades. One way or another, they get their monopoly rents.
10. Re: The "Floor" was always a kludge by Scottingham · 2016-01-27 05:51 · Score: 1
  
  The SEC is a corrupt organization that is completely full of shit.
  Seconded.
11. Re:The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 05:57 · Score: 0
  
  but having a few actors with the ability to trade and manipulate prices while normal traders have no clue or visibility on what is going on
  Yes, and why is that? Because governmental financial regulations make it next to impossible to create new markets in securities (or any other kinds of financial services). That is, the primary effect of those financial regulations that ostensibly exist to "protect" us is to create government mandated monopolies. It is no wonder that people like Hillary are in bed with Wall Street.
  The fact that these government-created monopolies happen to use high frequency trading is pretty much irrelevant; before HFT, they'd just charge vastly inflated prices for trades. One way or another, they get their monopoly rents.
  My understanding was that there is no or very limited regulation of HFT (but many have asked for it). And to be a HFT actor you only need a trading license and the capital and capability to invest in fiber to the exchange, supercomputers in the building next door, including custom hardware design, and a world class programming team.
12. Re: The "Floor" was always a kludge by Actually,+I+do+RTFA · 2016-01-27 06:08 · Score: 2
  
  longer delays tend to produce bigger swings, for the simple reason that a system can go off the rails longer before the market corrects it.
  
  Longer delays mean that new information cannot affect the market for a longer period of time. Assuming that it's much faster to abort acting on the information than to begin acting on it, that gives a longer period of time for validation/analysis of that information. See also, the huge blips that comapnies get based on twitter rumors.
  
  But there's an even more basic error in your reasoning, namely the assumption that market swings are bad or that we should adopt policies to reduce them.
  Stability is a good thing. I'm not sure what value wild intra-day voitility provides. Longer term stability menas that longer term plans can be mad.e
  
  --
  Your ad here. Ask me how!
13. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 06:12 · Score: 0
  
  That's how the SEC be.
14. Re: The "Floor" was always a kludge by lgw · 2016-01-27 06:20 · Score: 1
  
  You don't plan based on short term market swings, full stop. If you need to ensure something about a market price in the future, you buy insurance - simple as that. If you're a farmer who wants to sell crops 4 months from now, you have several ways of locking in a price, for a fee, just as you'd buy crop insurance.
  Intraday movements are like the movements of a piston in a piston engine - it doesn't matter at all that they don't move in the same direction the car is going.
  
  --
  Socialism: a lie told by totalitarians and believed by fools.
15. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 06:21 · Score: 0
  
  The SEC is a corrupt organization that is completely full of shit.
  Citation required.
16. Re: The "Floor" was always a kludge by PlusFiveTroll · 2016-01-27 06:31 · Score: 1
  
  Your stock can drop instantly by half due to a computer error, but if the actual value of your stock is worth more than that, it will quickly return to its original value. It's called holding long term.
  The issue here that you're having a problem with is people near the trading core can react much faster to real bad news, and you don't like it much.
17. Re: The "Floor" was always a kludge by Iamthecheese · 2016-01-27 06:44 · Score: 1
  
  Okay, but can you provide evidence they were wrong about this?
  
  --
  If video games influenced behavior the Pac Man generation would be eating pills and running away from their problems.
18. Re:The "Floor" was always a kludge by knightghost · 2016-01-27 06:53 · Score: 1
  
  Because governmental financial regulations make it next to impossible to create new markets in securities (or any other kinds of financial services).
  Wall Street has over a hundred years of history producing melt downs just 6 years after deregulation. It's as regular and predictable as clockwork.
19. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 07:12 · Score: 0
  
  Yeah, it's certainly a terrible idea to plan based on them since whenever one of these companies loses billions of dollars on their "flash crash" the exchange will just undo everything and give the billions of dollars back.
20. Re: The "Floor" was always a kludge by WoOS · 2016-01-27 07:14 · Score: 1
  
  Unfortunately, "market" price does not mean what it sounds like (ie, the value of something _right now_); it includes future speculation.
  Predictions about future returns are part of "the value of something right now", so your distinction makes no sense.
  I think what would be better to say is that market price itself is used as information for future speculation.
  
  In fact, the opposite is true mathematically: longer delays tend to produce bigger swings, for the simple reason that a system can go off the rails longer before the market corrects it.
  It would be true for a "real" control system, i.e. a system which tries to control a variable to achieve/follow a setpoint. In such a system the shorter the delay the better the variable will follow the setpoint. Yet due to technical analysis (i.e. trying to predict the future price of a commodity from the "chart" of the price up to now) in financial trading the variable can influence the setpoint. In such a scenario a short delay can mean sharp, large swings. So instead of a depression of prices over months they will fall within an hour. Or rather would fall if there hadn't been circuit breakers installed on automated trades. So if automated HFT was so great, why does the NYSE limit it when it looks to start running amok?
  But there's an even more basic error in your reasoning, namely the assumption that market swings are bad or that we should adopt policies to reduce them.
21. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 07:15 · Score: 0
  
  ROFLMAO you are so naive LOL
22. Re:The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 07:45 · Score: 0
  
  The "Floor" with its slow water-based life forms making noises and moving their appendages was always a kludge. If stock trading could have arrived on earth fully formed, it would have been with frictionless trading and marketing pricing instantly available to everyone to act upon immediately. We're finally getting there.
  Wouldn't it be much more fun if they could be replaced by sweaty robots with mustard stains on their ties and nine phones stuck to the side of their head running around and shouting at each other? You could sell tickets.
23. Re: The "Floor" was always a kludge by ShanghaiBill · 2016-01-27 07:47 · Score: 4, Insightful
  
  Okay, but can you provide evidence they were wrong about this?
  Of course not. He cannot even provide a theoretical reason why faster transactions would lead to instability. Systems with hysteresis, or lag, tend to have less stability (ask any helicopter pilot). In theory, faster transactions should lead to more stability, and this is true in practice as well.
  HFT is good for market stability, good for retail investors (far lower transaction costs), and, by making capital markets more efficient, good for the overall economy. The only losers are the old inefficient and expensive brokerages, which mostly no longer exist. Good riddance.
24. Re: The "Floor" was always a kludge by currently_awake · 2016-01-27 07:49 · Score: 2
  
  High speed trading DOES require planning to take advantage of short term swings, full stop. They see what's going to happen and try to get in the path of it so they can siphon off money as it flows past.
25. Re:The "Floor" was always a kludge by ShanghaiBill · 2016-01-27 07:52 · Score: 1
  
  Your trades as an Etrade customer are not at all executed as "HFT" in any way that gives any meaning.
  How do you think Etrade executes your transaction? Many of their trades are pooled and settled internally (you buy shares from another Etrade customer that is selling). But if they need to balance their pool by purchasing from the exchange, it almost certainly is done by HFT.
26. Re:The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 07:54 · Score: 0
  
  Actually ETrade "sells its flow", which is to say ETrade has a contract with an HFT firm to send all of its trades there, to be done at a level guaranteed by the HFT to be slightly better than prevailing market price.
  The HFT firm pays ETrade for the privilege. Thus ETrade customers are actually getting the advantage of some of the most sophisticated HFT algorithms out there.
  Who is getting screwed?
  1. The big institutional investors, who used to face the little guys on the exchanges but now only face each other and the HFTs.
  2. The floor traders on the exchanges, who used to be able to play incredible shenanigans with the markets.
  (posting anonymously because I am an insider)
27. Re:The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 07:57 · Score: 0
  
  We're finally getting there.
  There's just all these parasitic, front running HFT firms getting in the way. I wonder how the system got so clogged?
28. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 08:03 · Score: 0
  
  LOLMAO!
  Wait, this is China, right?
29. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 08:15 · Score: 0
  
  Systems with hysteresis, or lag,
  That's not what hysteresis is. Lag is lag. Hysteresis is an asymmetrical response to stimulus generally based on the sign of the slope of the input. In fact, systems with hysteresis can actually be more stable than systems without.
30. Re: The "Floor" was always a kludge by crow_t_robot · 2016-01-27 08:27 · Score: 1
  
  Wall street and the SEC continually trade employees back and forth. To get into the SEC you need to have wall street knowledge so wall street firms can have their employees apply and be insiders and SEC people that scratch the back of wall street can eventually leave the SEC for much better paying positions at private wall street firms.
31. Re:The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 08:29 · Score: 0
  
  Your trades as an Etrade customer are not at all executed as "HFT" in any way that gives any meaning.
  How do you think Etrade executes your transaction? Many of their trades are pooled and settled internally (you buy shares from another Etrade customer that is selling). But if they need to balance their pool by purchasing from the exchange, it almost certainly is done by HFT.
  It is not using HFT in any way that is meaningful for you as an investor vs other HFT actors. And, to my knowledge Etrade is actually not one of the real HFT actors (with custom hardware supercomputers and nano-second chasing elite programming teams and hardware designers), but have a much more traditional electronic exchange relationship.
32. Re:The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 08:36 · Score: 0
  
  Your trades as an Etrade customer are not at all executed as "HFT" in any way that gives any meaning.
  How do you think Etrade executes your transaction? Many of their trades are pooled and settled internally (you buy shares from another Etrade customer that is selling). But if they need to balance their pool by purchasing from the exchange, it almost certainly is done by HFT.
  It is not using HFT in any way that is meaningful for you as an investor vs other HFT actors. And, to my knowledge Etrade is actually not one of the real HFT actors (with custom hardware supercomputers and nano-second chasing elite programming teams and hardware designers), but have a much more traditional electronic exchange relationship.
  Ok, poster below who seems to be in the know says Etrade is actually outsourcing their trades to a real HFT actor, with a guarantee to provide slightly below market price rates (which a HFT trader can easily do and still profit on the agreement, but usually when trading on their own they are arbitraging ultra-short-term positions).
33. Re: The "Floor" was always a kludge by clovis · 2016-01-27 08:46 · Score: 3, Informative
  
  The faster the trading, the worse the swings will get.
  The SEC's investigation into the 2010 Flash Crash, came to the exact opposite conclusion: that HFTs have a stabilizing influence on markets by providing liquidity. One of the reasons for the crash was that when prices moved outside of the expected range, many HFTers stopped trading, and the resulting drop in liquidity, and rise in spreads, caused some investors to panic.
  I'm not seeing the statement that " HFTs have a stabilizing influence on markets by providing liquidity" in the SEC report for the big flash crash of 2010, nor statements to that effect. https://www.sec.gov/news/studi...
  It's full of statements like this:
  
  In general, however, it appears that the 17 HFT firms traded with the price trend on May 6 and, on both an absolute and net basis,
  removed significant buy liquidity from the public quoting markets during the downturn.
  However, for those who don't want to read the report, in no way is the SEC suggesting "the crash was caused by HFT traders".
  Here is a recent SEC paper on HFT trading:
  https://www.sec.gov/marketstru...
  Regarding the benefits of HFT on the market, the research they analyzed suggests good benefits (increase liquidity and reduce volatility), but it depends.
  The benefits of passive HFT strategies seem to be quite positive and HFT's may be taking the place of market makers.
  Aggressive HFT strategies provide liquidity in stable markets, but has worsened volatility when the market experiences abberations
34. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 08:56 · Score: 0
  
  Stock options act like insurance, stopping loss for the purchaser at the strike price.
  Ooloorie is correct about delays. In fact, it's a well-established pattern. Short term traders find themselves caught locked in their positions on a down Friday. Then, they panic over the weekend and queue sell their orders, trying to unload their negative positions. When the market opens again on Monday, as the sell orders are processed, tremendous selling pressure pulls prices down profoundly in the first few minutes of active trading. The effect is particularly pronounced on holiday weekends when the market is closed on Monday.
35. Re:The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 09:07 · Score: 0
  
  "Normal traders" have NEVER had direct access to the exchange. In the old days, an investor would use a broker to execute the trade manually. Today, all of the trades are executed by HFT. There is no conflict between manual traders and HFT because there are no manual traders. The only difference to retail investors is that transactions prices today are far lower.
  1) "Normal traders" have NEVER had direct access to the exchange.
  mostly true in recent times for listed stocks. But there are many exchanges and historically participation wasn't limited to seat holders.
  2) In the old days, an investor would use a broker to execute the trade manually.
  mostly true for stocks traded on an exchange
  3) Today, all of the trades are executed by HFT.
  absolutely false
  4) There is no conflict between manual traders and HFT because there are no manual traders.
  again wrong
  5) The only difference to retail investors is that transactions prices today are far lower.
  true
36. Re:The "Floor" was always a kludge by Copid · 2016-01-27 11:05 · Score: 1
  
  Who is getting screwed? 1. The big institutional investors, who used to face the little guys on the exchanges but now only face each other and the HFTs. 2. The floor traders on the exchanges, who used to be able to play incredible shenanigans with the markets.
  Exactly this. There have always been lucky bastards who were closer to the action and used that fact to extract cash from people far away, even back when markets included trades that were done by courier moved by sailing ship. The definition of "closer" has just gotten smaller and smaller and instead of a few lucky lumps picking up big chunks of money, it's a bunch of them moving really fast to pick up pennies. Nobody has really made a convincing case that the total amount of cash that these folks extract is larger than it was in the past as a percentage of total transactions. My guess is that it's getting smaller and smaller, and the difference between how much the average Joe pays and how much institutional investors pay is getting smaller as well.
  
  --
  An interesting anagram of "BANACH TARSKI" is "BANACH TARSKI BANACH TARSKI"
37. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 11:42 · Score: 2, Informative
  
  Huh? New Zealand's stockmarket has been purely electronic electronic LONG before the NYSE did. (We closed our stock exchange 'floor' with people actually in a physical room back in 1991. From then onwards, all transactions were done completely electronically by brokerages, at the brokerages). HFT is not necessary for getting rid of inefficient brokerages, merely a market committed to being sensible and doing electronic brokering.
  That's right, 1991. NYSE went to a hybrid market in 2007 as best as I can tell.
  Besides, "As recently as May 2014, a CFTC report concluded that high-frequency traders "did not cause the Flash Crash, but contributed to it by demanding immediacy ahead of other market participants" Wikipedia. HFT made the flash crash worse. You're saying the SEC said HFT was okay, but honestly, look at that criticism of that report in the very article you linked to,
  Hysteresis isn't lag. Lag means there's a delay -- but it could be a fixed delay. HFT isn't about faster transactions -- it's about MORE transactions made by more agents and decision makers - and it's chaos theory territory because each other HFT agent will behave according to its own algorithms that are liable to change as and how they want -- and the HFT traders are not doing this because they want to 'stabilise the market', they're doing it to MAKE MONEY.
  Ask any pilot if they want every control surface behaving independently according to whatever algorithm each control surface wants to do, without the pilot knowing when or where each control surface will change its behaviour, without caring about the rest of the plane; or if they want every control surface behaving predictably and how they expect it to behave.
38. Re: The "Floor" was always a kludge by ooloorie · 2016-01-27 14:33 · Score: 1
  
  I think what would be better to say is that market price itself is used as information for future speculation.
  Of course, people use past information for predicting the future, how is that in any way remarkable, or a problem?
  
  In such a scenario a short delay can mean sharp, large swings.
  Obviously, if you trade ten times as fast, your market moves ten times as fast. But you claimed that the swings don't just get faster, they also get bigger in magnitude than they would for a slower moving market.
  
  So if automated HFT was so great, why does the NYSE limit it when it looks to start running amok?
  Why does the NYSE do anything? To make money for themselves and for the people they are in bed with. They certainly don't do it to help you or me.
  When HFT produces large swings, most likely someone screwed up on their HFT algorithm. That's a good thing for anybody not using HFT (i.e., you and me). It absolutely sucks for the people making those trades.
39. Re:The "Floor" was always a kludge by ooloorie · 2016-01-27 14:38 · Score: 1
  
  Wall Street has over a hundred years of history producing melt downs just 6 years after deregulation. It's as regular and predictable as clockwork.
  The stock market has been highly regulated since the progressive era; "deregulation" is a misnomer, and simply refers to crony capitalist handouts to Wall Street, not an actual removal of significant regulations.
  Furthermore, the market is a random walk, so yes, big market drops are fairly regular. That's a good thing too.
40. Re:The "Floor" was always a kludge by Jeremi · 2016-01-27 17:34 · Score: 1
  
  I suspect the parent poster mean that the frequency at which you can make trades via your eTrade account is limited; if nothing else by the speed at which you can click the "Buy/Sell" button in your web browser (and probably by other controls as well, to prevent people from abusing the web site with bots).
  So if the fastest you can make trades on eTrade is 1 trade per second, that's hardly HFT in the modern sense of the term.
  
  --
  
  I don't care if it's 90,000 hectares. That lake was not my doing.
41. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 17:38 · Score: 0
  
  The faster the trading, the worse the swings will get.
  The SEC's investigation into the 2010 Flash Crash, came to the exact opposite conclusion: that HFTs have a stabilizing influence on markets by providing liquidity. One of the reasons for the crash was that when prices moved outside of the expected range, many HFTers stopped trading, and the resulting drop in liquidity, and rise in spreads, caused some investors to panic.
  If anything that cripples liquidity.
  You're basically holding prices hostage in exchange for liquidity. Swing too low/high and HFTs punish you by closing the tap. March to the beat of the HFTs and watch the money flow; all other events be damned because humans can't act/react/update their models fast enough.
  Thats not to say that HFTs CAUSED the flash crash, but they did exasperate the situation.
42. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-27 19:45 · Score: 0
  
  > Predictions about future returns are part of "the value of something right now", so your distinction makes no sense.
  I think phisicists had that moment a while ago -- read up on "quantum field theory". Turns out they got infinite results, because things don't converge and had to do some renormalization black magic to extract meaningful results from that.
  The bad thing is that this trader folks aren't half as smart as Dirac, Feynmann et al. were, their brains bloated by short-term greed.
43. Re: The "Floor" was always a kludge by serviscope_minor · 2016-01-27 21:15 · Score: 1
  
  Systems with hysteresis, or lag, tend to have less stability (ask any helicopter pilot). In theory, faster transactions should lead to more stability, and this is true in practice as well.
  Or, just ask an analog circuit about lots of gain at high frequency with feedback...
  You're also confusing frequency with lag. The two are quite different. Lag is what causes phase shifts and that's what turns negative feedback into positive feedback.
  HFT is good for market stability,
  The flash crash was the result of lots of automated trading systems interacting. There's been a lot fo research but no one really knows.
  
  --
  SJW n. One who posts facts.
44. Re: The "Floor" was always a kludge by sociocapitalist · 2016-01-28 00:39 · Score: 1
  
  >
  But there's an even more basic error in your reasoning, namely the assumption that market swings are bad or that we should adopt policies to reduce them.
  Were such swings being made by humans perhaps, but when automated trading algorithms panic sell there is no market reason behind to justify it.
  
  --
  blindly antisocialist = antisocial
45. Re: The "Floor" was always a kludge by ooloorie · 2016-01-28 00:56 · Score: 1
  
  Were such swings being made by humans perhaps, but when automated trading algorithms panic sell there is no market reason behind to justify it.
  Market swings don't need to be "justified".
  
  blindly antisocialist = antisocial
  "You are unmutual."
46. Re: The "Floor" was always a kludge by dywolf · 2016-01-28 01:23 · Score: 1
  
  the SEC is a largely powerless group that rarely enforces its own rules except in the most egregious situations, and rarely against the biggest offenders.
  when they talk about regulatory capture, the SEC is the textbook definition.
  
  --
  The guy who said the election was rigged won the presidency with the second-most votes.
47. Re: The "Floor" was always a kludge by dywolf · 2016-01-28 01:23 · Score: 1
  
  found the shill
  
  --
  The guy who said the election was rigged won the presidency with the second-most votes.
48. Re: The "Floor" was always a kludge by KGIII · 2016-01-28 02:59 · Score: 1
  
  Electronic !== (by default, anyways) HFT.
  
  --
  "So long and thanks for all the fish."
49. Re: The "Floor" was always a kludge by WoOS · 2016-01-28 07:12 · Score: 1
  
  Of course, people use past information for predicting the future, how is that in any way remarkable, or a problem?
  Uhm, because if the market really was evaluating the price of a commodity (including all the information about the future), then the history of the price only tells you about how humans previously evaluated that information. That is great if one wants to exploit human psychology (or nowadays machine psychology in terms of having better algorithms than the neighbouring bank). But then the AC's statement of the market price not expressing current value but including expected future speculation (at least that's how I interpret it) is true.
  
  Obviously, if you trade ten times as fast, your market moves ten times as fast. But you claimed that the swings don't just get faster, they also get bigger in magnitude than they would for a slower moving market.
  Yes, I claim it because during those few minutes, seconds, milliseconds of machine trading the only information which changes is the (recently) past price, thus there is no other influence on the set-point than what is itself based on that influence.
  In contrast in a theoretical very slow market (lets say 3 trade points a day) other - more real world (aka fundamental) - information has time to influence the set point before a trend can even be recognized and followed. So new news (the previously announced contract will be delayed, the government decided to spend more money due to the castastrophic economic predictions of yesterweek) or new insights (careful analysis of the announced contract shows low ROI in comparison to similar contracts, the economist making the predicitons have bad track record of correctness) can stop trends early.
  Obviously such additional information could also strenghten trends. But then the price would really be a "prediction" of future value (as far as that is possible) based on new information and not just - exaggerating - the extrapolation of the step function response of the market to the last information. Does not prevent bubbles as history teaches us (human psychology again). But those take years and not merrily hours, so the (financial) environment has time to adapt.
50. Re:The "Floor" was always a kludge by Anonymous Coward · 2016-01-28 08:16 · Score: 0
  
  Ah, no. The problem is that the systems are
  1. nonlinear, multivariate differential equation systems who stability is neither proven or known, and those creating them have ZERO knowledge of even the basics of these subjects. The systems are routinely treated with hubris and arrogance without considering even what such systems' behaviors would be if they were even merely linear!
  2. generally not coded to enforce value seeking (i.e. finding the correct price of a good of value). Instead they are coded like a game of COREWAR without regard to this fundamental economic purpose that markets are supposed to fill. Thus we do not know the actual price of anything anymore in terms of business fundamentals or economic value. Utterly nothing! So basically the US economic is running open loop with the only inputs being "the casino" that wants a house win above all else
  4. risk assessed based on flawed risk models that presume linearity and event independence which are trivially demonstrable as not being in place in current markets and certainly not HFT systems to a level that would be necessary to validate the fundamental assumption required to derive ANY risk prediction formula derived from them - basically all current risk models are pumping out 100% random bull shit and are not indicative of actual risk
  3. now moving too fast to "regulate" or prevent catastrophic crashes due to instability. Flash crashes? Those have an eerie resemblance to catastrophic phase changes often seen in dynamical systems.
51. Re: The "Floor" was always a kludge by Anonymous Coward · 2016-01-28 13:30 · Score: 0
  
  Uhm, because if the market really was evaluating the price of a commodity (including all the information about the future), then the history of the price only tells you about how humans previously evaluated that information.
  But people aren't only using the price history to price securities; they use the price in addition to all other information. And that is what people should do. There is nothing at all wrong with that.
  
  Yes, I claim it because during those few minutes, seconds, milliseconds of machine trading the only information which changes is the (recently) past price, thus there is no other influence on the set-point than what is itself based on that influence.
  Yes, and that is fine. How does that amount to price swings getting bigger?
  
  In contrast in a theoretical very slow market (lets say 3 trade points a day) other - more real world (aka fundamental) - information has time to influence the set point before a trend can even be recognized and followed.
  You have an entirely incorrect mental model of how securities are priced, hence your conclusion make no sense.
52. Re: The "Floor" was always a kludge by Agripa · 2016-01-29 09:16 · Score: 1
  
  So the random non-trivial delay in trading that humans provides is good for preventing huge swings.
  So like dominant pole compensation?
53. Re: The "Floor" was always a kludge by toddestan · 2016-01-30 06:05 · Score: 1
  
  That's exactly the problem with HFTs. They won't buy unless they already have someone lined up to sell it to immediately. Because that's what they do. They are middlemen who aren't interested in holding stocks, just flipping them instantly for fractions of a cent profit. So the idea that they provide liquidity is a sham - if there's no one else that wants to buy the stock, the HFTs aren't going to buy it either. So HFTs really only provide liquidity... until they don't.
Re:FIRST POST FOR SYSTEMD? by ArchieBunker · 2016-01-27 05:04 · Score: 1, Troll

Next up a systemd kernel plugin that runs as root for high speed trading.

--
Only the State obtains its revenue by coercion. - Murray Rothbard
The obvious next step by Anonymous Coward · 2016-01-27 05:08 · Score: 1

The obvious step is to make stock trading completely isolated from reality: in addition to automated markets and high-speed traders, introduce automated day-traders, automated investors and automated mom-and-pops traders. Perhaps this will let the human economy concentrate on making things, while the stock markets can keep pushing bits around. It's the only natural evolution of a "market" whose total "value" is a multiple of the world's entire GDP.
Feeling the Bern. by Anonymous Coward · 2016-01-27 05:09 · Score: 0, Insightful

This is why we need someone like Bernie sanders. Gotta stand up to these horrible practices instead of encouraging, protecting, and bailing them out.
1. Re: Feeling the Bern. by ArmoredDragon · 2016-01-27 05:27 · Score: 2, Insightful
  
  No, Bernie just wants a France style economy where the government collects outright burdensome taxes and imposes massive trade barriers. France has perhaps the worst economy of any first world country, so no thanks, you can keep your Bernie propaganda.
2. Re: Feeling the Bern. by Anonymous Coward · 2016-01-27 06:04 · Score: 0
  
  Will you see any of that money anyways if it ends up going to the federal government instead? It's like money getting sucked into a black hole. At least keep it with the company which will keep it invested in the economy. Still tho, the bloated US government appreciates your rabid, volunteer ranting in support of their bloat. You are just another riled up libtard.
3. Re: Feeling the Bern. by lgw · 2016-01-27 06:24 · Score: 1, Troll
  
  No, you're basically a lying faggot making apologies for massive multinational corporations skirting taxes using any means necessary.
  I think we need a new term here. I propose "the gaydwin effect", by which you have just gaydwinned the thread.
  
  --
  Socialism: a lie told by totalitarians and believed by fools.
4. Re: Feeling the Bern. by Anonymous Coward · 2016-01-27 06:34 · Score: 0
  
  HEHEHEHE yeah, companies keep it invested in economy. YEAH INVESTED IN THE THIRD FERRARI FOR THE CEO
5. Re: Feeling the Bern. by Anonymous Coward · 2016-01-27 07:03 · Score: 0
  
  France, the worst economy of any First-world country?
  Huh. Well, I guess that they're really suffering there, huh?
  They must be Les Misérables!
6. Re: Feeling the Bern. by Anonymous Coward · 2016-01-27 09:26 · Score: 0
  
  Huh. Compared to California, France has a smaller GDP, nearly twice as many workers, and about 65% of the GDP per person. Oh, and more debt. And a slower GDP growth rate. Yep, France is a great example of a roaring socialist economy!
7. Re: Feeling the Bern. by Anonymous Coward · 2016-01-27 14:34 · Score: 1
  
  But I heard California was Communist, Socialist, and a criminal economic wasteland soaked in debt and the blood of Mexicans!
High-Speed Firms Now Manipulate Almost All Stocks by QuietLagoon · 2016-01-27 05:09 · Score: 2

FTFY
A Taste of Armaggeddon? by chthon · 2016-01-27 05:13 · Score: 4, Interesting

If computers do trade stocks, isn't that than the same as computers which go to war?
1. Re:A Taste of Armaggeddon? by Anonymous Coward · 2016-01-27 05:18 · Score: 0
  
  I look forward to the day when the systems arbitrarily decide to boost some nonsensical commodity and massively inflate the value of it at hyperspeed before people can react to it
  Finally the sandwich-heavy portfolio pays off!
2. Re:A Taste of Armaggeddon? by gstoddart · 2016-01-27 05:24 · Score: 3, Insightful
  
  Well, when the computers completely wipe out the financial system or go hysterical with automated trading it will be further proof that the market is already so far removed from reality as to be dangerous.
  This is just another example in a long line of hubris by the idiots who think they run the financial system, but who otherwise don't really know what the fuck it's doing.
  I predict within a year at least one trading halt/panic, and a massive government sponsored do-over to undo what this stuff screws up.
  High frequency trading is little more than theft by entities who feel entitled to a cut of everything. It's bound to fail, it's only a matter of how long.
  
  --
  Lost at C:>. Found at C.
3. Re:A Taste of Armaggeddon? by Anonymous Coward · 2016-01-27 05:41 · Score: 0
  
  Think how marvelous that would be.
  It would be neat and painless. There would be no more barbarity.
  All of that disaster, disease, starvation, horrible, lingering death, and anguish would be avoided.
4. Re:A Taste of Armaggeddon? by Anonymous Coward · 2016-01-27 06:17 · Score: 0
  
  I predict within a year at least one trading halt/panic, and a massive government sponsored do-over to undo what this stuff screws up.
  High frequency trading is little more than theft by entities who feel entitled to a cut of everything. It's bound to fail, it's only a matter of how long.
  Great!
  For those of us who are fundamental based buy and hold investors who use limit orders this would be a GODSEND. I made good money in that crash in August. If I had more experience, I would have made a ton more.
  Computers can trade faster... they cannot trade smarter. Just set your price sensibly for a solid company, use limit orders, and profit when others screw up.
5. Re:A Taste of Armaggeddon? by ewibble · 2016-01-27 07:44 · Score: 4, Insightful
  
  Computers, may trade faster, smarter, whatever, the question is do they actually add any real value to the economy, or just skim off the top from the actual people that produce the goods and services. I think it is the latter, like human stock brokers, but much better at it. Do we really need a better parasite?
6. Re:A Taste of Armaggeddon? by roman_mir · 2016-01-27 14:45 · Score: 1
  
  You can start your own trading business and only let people do trading there. Oh, you think that trading itself is 'parasitic'. Do you realize that you are involved in trading every day yourself? Whatever you are doing at work, somebody is trading the value of that for other people's work. When you visit a store, you are participating in that trade, because the store bought the items you are buying now.
  A manufacturer can produce hundreds of tons of hair bands for example, no end customer can or needs to buy that much. Distributors buy tons of the stuff from the manufacturer, allowing the manufacturer to continue producing. Smaller distributors buy hundreds of kilograms from the large distributors, allowing the large distributors to put together enough funding to buy tons of the stuff. Suppliers buy tens of kilograms from the smaller distributors, allowing the smaller distributors to exist.
  Stores buy dozens of packages, allowing the smaller distributor to exist and the final client buys one or two packages for his or her use. The prices per package go up as the number of packages that are bought drop. This allows the entire chain to exist, providing enough capital for the manufacturer to keep producing, while without this supply chain the manufacturer would not even exist because he could never sell individual products to enough people without a distribution network.
  This is an approximation of what the stock or other markets are. Allowing many deals to take place to provide enough liquidity in the market for investments to finance businesses. Automated trading is no different from automated factory floors.
  
  --
  You can't handle the truth.
7. Re:A Taste of Armaggeddon? by Anonymous Coward · 2016-01-27 18:56 · Score: 0
  
  You're wasting your time. The economic ignorance of the average Slashdot user is simply too profound. They think they understand economics and what motivates others, but in fact they understand neither. I gave up trying to explain econ to Slashdot years ago. It's like trying to teach calculus to your dog; an exercise in supreme frustration.
Gambling Robots by monkeyxpress · 2016-01-27 05:15 · Score: 5, Insightful

Honestly, they might as well replace all the workers in the trading system with robots. None of this produce real wealth anymore. The original idea of the stock exchange was to allocate capital efficiently from savers to businesses that could use it to create productivity growth. But we haven't had a capital constrained economy for almost two decades now. Banks can create whatever capital they want (or can fool you into believing in) using debt-equity fudges, and current negative real interest rates on cash indicate that the problem is not capital availability but consumer demand.
When you have no capital constraints the stock market 'value' is determined almost entirely by hype. Even worse, private equity funds are so big now that they can ensure the public exchanges never see any of the juiciest profit making companies until they are fully asset stripped and ready to pump and dump.
1. Re:Gambling Robots by Anonymous Coward · 2016-01-27 05:32 · Score: 0
  
  It produces a massive amount of wealth. The problem is that it's a vehicle for the uber elite that control the markets, plus their lackeys on commission / kick-backs. It also allows the mega-corp to buy rivals or threatening upstarts with mere stocks based on pseudo values. I.e. it allows the uber elite to increase their wealth and control with almost zero effort of cost.
2. Re:Gambling Robots by fustakrakich · 2016-01-27 05:42 · Score: 3, Interesting
  
  But we haven't had a capital constrained economy for almost two decades now.
  More like four and a half... However, normal society is still capital constrained, by the financial industry through usury. All that money is flowing overhead and we get what leaks through the pipe.
  
  --
  “He’s not deformed, he’s just drunk!”
3. Re:Gambling Robots by Anonymous Coward · 2016-01-27 05:43 · Score: 0
  
  It also allows the mega-corp to buy rivals or threatening upstarts with mere stocks based on pseudo values.
  Only if the rival or upstart is publicly traded.
  Wargames said it best: The only winning move is to not play.
4. Re:Gambling Robots by Anonymous Coward · 2016-01-27 05:51 · Score: 0
  
  Blarg! NO! You are looking at the daily gyrations of popularity, fear, and fashion, and assuming the short term movements are the only thing going on.
  Long term, you are buying the future cash flow from a business. Apple has LOTS of cash flow. They are worth LOTS of money. The fact that Apple currently has a relatively low price is because people are worried if someone is going to take the iPhone's lunch in upcoming years. I think the market is worried too much, so I buy.
5. Re:Gambling Robots by tnk1 · 2016-01-27 05:58 · Score: 2
  
  Stocks do still offer real value, you just aren't going to realize it unless you hold a good company for a fairly long amount of time.
  Too many people are trying to day trade their way to instant fortunes. As the HFT shows, you can make a lot of money on the daily chaotic fluctuation of stock prices, but now you're in a race against the computers to do it.
  However, unless one of those absurd bid-ups actually ends a company somehow, it is only a worry for people who are trying to run complex short term trading strategies. As a long term investor, you simply ride out the fluctuation over the long term. And if they bid up stocks or other instruments you've been holding for years, then you sell and take your profit and diversify with the money. And probably buy back in later when the stock has settled down again.
  If you buy a good stock today, or a fund that tracks the S&P, in thirty years you will have made money even if there was a recession in the meantime. People who bought stocks in 1929, right before the crash and the Great Depression, still made good money decades down the road. At that point, it is just a matter of whether you could make ends meet during the recession and depression periods so that you don't have to sell out your holdings to get cash.
  Of course, the problem with this is if the banks become vulnerable to the failure of complex or short term strategies. Then that does have a ripple effect down the road. Which frankly, is why the banking industry should have not been able to get away with their failures a few years ago.
  To me, bailouts and regulation are two sides of the same coin. They both retard the financial industry by removing from it the feedback you get from failure. Spend years under regulation and when it is loosened even a little, so that your economy doesn't completely stagnate, you have people who have never learned the cost of failure and so they go nuts like a bunch of lottery winners who have no idea what to do with all their money.
  Of course, if we're completely unable to avoid bailing out losers who fail, we may well need to regulate them into the future. However, there are costs to that path as well. That's why we ended up deregulating them to begin with.
  If I were a Republican candidate, I'd probably suggest a plan by which we re-regulated and then *slowly* de-regulated back down over a decade or so. And absolutely zero bailouts for failures in the meantime. The goal would be to develop bankers/executives in positions of power who know how to self-regulate so we don't need to pay for a bureaucracy to try and do that for them.
6. Re:Gambling Robots by fustakrakich · 2016-01-27 05:59 · Score: 1
  
  :-) Exactly. I do stay out of debt. The main cure to the problem is for people to zero all debts. But it will cause complete collapse. C'est la vie... It will free up the market from the creditors...
  
  --
  “He’s not deformed, he’s just drunk!”
7. Re:Gambling Robots by no-body · 2016-01-27 06:12 · Score: 1
  
  None of this produce real wealth anymore.
  But they are making money or the companies would not be in business.
  Where is that money coming from?
8. Re:Gambling Robots by Anonymous Coward · 2016-01-27 06:32 · Score: 0
  
  The people who do produce real wealth.
9. Re:Gambling Robots by TheDarkMaster · 2016-01-27 06:38 · Score: 1
  
  Does not work in the long run "tighten the tap and then open slowly." The first and perhaps the second generation will understand the message, but the third and fourth will do the same irresponsible way as the first generation predecessors acted. You humans must be constantly guided and monitored to be able to live in a stable manner in a long period of time.
  
  --
  Religion: The greatest weapon of mass destruction of all time
10. Re:Gambling Robots by Anonymous Coward · 2016-01-27 06:44 · Score: 0
  
  Ok, I presume you've got the cash to cover me then?
11. Re:Gambling Robots by Anonymous Coward · 2016-01-27 07:26 · Score: 0
  
  From you and your 401k.
12. Re:Gambling Robots by Anonymous Coward · 2016-01-27 07:41 · Score: 0
  
  It produces no wealth, it only concentrates it. Wealth starts with access to cheap energy. Energy itself may not provide a great return on investment, but it is the source of real wealth, and acts as a multiplier for everything else. Unfortunately, the rich and powerful are focused on concentrating wealth and treat it as a zero sum game. Meanwhile, the "greens" are too busy demonizing energy to recognize that it is essential to our prosperity. Advocating diffuse, unreliable, expensive renewables, which also require expensive backup and new continental grids, is a losing proposition for everyone excepting those harvesting the subsidies.
  Without a sane energy policy and properly incentivizing the production of energy, prosperity will evaporate leaving only a residue of the super wealthy, and eventually civilization itself will crumble. Even so, most "greens" are ideologically wedded to a renewable-only policy, and their crusade against nuclear has saddled us with 1950s era technology and crippling regulation and litigation, preventing any sort of progress. In the early days, nuclear was cheap, and rapidly deployed. Operating conventional nuclear plants have their drawbacks, but they still produce the safest and cheapest electricity today. Molten salt reactors (LFTR and the like) will enable unprecedented safety at low cost, while also addressing the waste issue. Obstructing their progress amounts to implicit support of the fossil fuel industry and concentration of wealth.
13. Re:Gambling Robots by Anonymous Coward · 2016-01-27 08:21 · Score: 0
  
  The fact that Apple currently has a relatively low price is because people expect no or negative growth for Apple's future cash flow
  
  There, FTFY. And, FWIW, I only give Apple a 10-20% chance of coming up with something to stop the red ink. Tim Cook just doesn't have "it".
14. Re:Gambling Robots by Zak3056 · 2016-01-27 08:59 · Score: 2
  
  None of this produce real wealth anymore.
  It doesn't "create" ANY wealth, and never has.
  There are a very limited numbers of ways to create wealth. The two most common are digging it out of the ground (i.e. mining, agriculture), or taking those things dug out of the ground and adding value to them (i.e. manufacturing (which includes things you wouldn't intuitively think of as manufacturing, like a pastry chef baking a pie--he has added value to the raw ingredients)). Pretty much everything else you can think of is just moving wealth around from one entity to another.
  
  --
  What part of "shall not be infringed" is so hard to understand?
15. Re:Gambling Robots by Anonymous Coward · 2016-01-27 12:07 · Score: 0
  
  Seriously. The first exec to jump the gun to failure will make the most before the next collapse.
16. Re:Gambling Robots by roman_mir · 2016-01-27 14:57 · Score: 2
  
  Correct, trading should be done by robots for the same reasons that factory work is often done by robots, because it is cheaper to run robots than people and thus the efficiencies go up.
  Also correct that real wealth is not produced by trading, trading is exchange of wealth. Real wealth is produced by manufacturing, mining, agriculture, things of that nature.
  However it is completely incorrect that the economy is not constrained by capital, it is absolutely constrained by lack of capital. The artificially printed currency is not capital though. There are no real savings in the system, the money is created on the whim by the likes of the Federal reserve and fractional reserve systems, the credit is mostly fake and programs like FDIC allow this to go on as long as nobody tests the validity of these assumptions.
  The reality is that there is no capital to borrow, the real interest rates by the Federal reserve are negative due to all this inflation but you cannot get any yield out of anywhere, so there is no incentive to save money in the high inflation economy (which is what most of the world is running right now with all the fake low interest rates, fake money being created, various QE and Stimulus programs, bailouts, etc.)
  The reality is that there is no real capital, which is why there is so little new business formation. The reality is that the values of the USD and bond are artificially high, driven there by the false belief of the market that the USA Fed can tighten its fiscal policy given their own metrics as to why the interest rates should or should not go up or down.
  The reality is that USA economy is in a very deep recession, the employment numbers are fudged, the real economic indicators are all horrible, Fed will groan and moan but will come up with an excuse to push interest rates down into the negative thus finalizing the destruction of the dollar.
  The moment that the world was taken off the gold standard (1971, Nixon default on the gold dollar) by proxy of the USD reserve currency being on at least some gold standard, the moment that happened the world's economies were directed on the path towards destruction. Then later, when Greenspan took the short term interest rate to 1 and eventually Bernanke took it to 0 (for 8 years) that was it, that was the final nail in the coffin of the USD and the economy.
  Governments should not be allowed to interfere with the actual economies and money of the people but they are and here we are, facing the music.
  
  --
  You can't handle the truth.
17. Re:Gambling Robots by toddestan · 2016-01-30 06:18 · Score: 1
  
  Actually, it's impossible for everyone to zero all their debts. If we tried, we'd literally run out of money to pay the banks before we'd be done paying off all the debts. They only way the system keeps going is that new debt is continually created to pay off the existing debts.
Re:FIRST POST FOR SYSTEMD? by Anonymous Coward · 2016-01-27 05:21 · Score: 1

You think you are first, but alas, you are just systemd.
Re:Cool by deKernel · 2016-01-27 05:30 · Score: 1

Wow...I think someone forgot to take their meds today. If, for some reason, you actually did take them....DOUBLE UP!
Rhank god for Bernie Sanders and Elizabeth Warren by Anonymous Coward · 2016-01-27 05:39 · Score: 0

And this is the foundation of your 401k !!!!!!
Thank god for Bernie Sanders and Elizabeth Warren.
The SEC is only interested in their friends on the other side of the revolving door.
There needs to be a minimum holding time for all securities.
New way to rig the stock market by evolutionary · 2016-01-27 05:43 · Score: 2

Wow, so all it takes now is one virus or one planned "feature" and you could give a new definition to insider trading. There are some things that we should think before we automate. (We already learned what happens when we deregulate/abstract...:-) ) The view Doyle and Clemens(Twain) had on the stock market (not exactly favorable) may have been justified.

--
"Imagination is more important than knowledge" - Einstein
1. Re:New way to rig the stock market by Anonymous Coward · 2016-01-27 06:00 · Score: 0
  
  We've also learned what happens when we over regulate. So unless you're bringing something in the form of proof of concept to the table I don't think we have any reason to dwell on your random gropes for something that you might think could be good but you're just not really sure.
2. Re: New way to rig the stock market by Anonymous Coward · 2016-01-27 06:20 · Score: 0
  
  What proofs does he need? Computers get hacked. It happens. These computers will get hacked and used to either gain money or disrupt other people from gaining money.
Re: Cool by Anonymous Coward · 2016-01-27 05:44 · Score: 0

Now every trade will be subject to an invisible tax by the HFT engine that buys and sells just ahead of you and trades with you at a premium.
Heads I win... by Actually,+I+do+RTFA · 2016-01-27 06:03 · Score: 5, Insightful

I'd be fine with this, if they weren't allowed to unwind transactions because of "computer glitches". If they wanna automate trading, they should have to take the good and the bad. But now, if their software does something stupid (like repeatedly buying at 25.01, and selling at 25 even) and you take advantage of it, they sue you and get the trades reversed.

--
Your ad here. Ask me how!
1. Re:Heads I win... by ewibble · 2016-01-27 08:01 · Score: 1
  
  You are dreaming, if make they make any significant loses because of a bug, they will not just go to the government and say look this will ruin the economy, you HAVE to fix this, and the government won't do it.
  You really think you can defend yourself against case from, one of these corporations, you will be bankrupt before even see a court, A class action suit wouldn't apply since it would be them initiating the case.
Faith in the System at risk? by IceAgeComing · 2016-01-27 06:09 · Score: 1

When I heard about high speed trading taking over the NYSE, I thought, "Time to look for a safer market for the small-time investor", since of course I can't compete with algorithms making thousands of trades per second. Of course I have a 401(K), which means I'm an indirect investor in the NYSE, but it's the only reasonable option my employer is offering me.
I don't know if I really have a choice any more; I don't know if there are any safer markets, where there is a limit to the transaction rate, or if as a U.S. citizen I have easy access to them. Perhaps no such markets exist any more, since there is inherent pressure for markets to compete in the short term by resorting to the same measures used by other "successful" markets (successful in the short term).
1. Re: Faith in the System at risk? by PlusFiveTroll · 2016-01-27 06:26 · Score: 1
  
  That is a silly view you have. You cares what the underlying technology is when you are making long term investments. HFT will just get your order filled faster. If you are attempting to day trade
  Don't.
2. Re:Faith in the System at risk? by Anonymous Coward · 2016-01-27 06:26 · Score: 0
  
  HFT is probably a hazard to short term prices, probably in both directions.
  If you are investing for retirement, you don't care about short term prices. You can ignore them. Just keep earning money doing what you do, and save as much as you can. Max out that 401K and Roth and you will be very, very happy in a few years.
3. Re:Faith in the System at risk? by lgw · 2016-01-27 06:32 · Score: 2
  
  If you care about intraday trading, you're doing investing wrong. If you care about stock price changes at a finer granularity than quarterly, your doing investing wrong. None of this automaton affects anything at the timescale investors care about - this is all automation of speculation, and the more it's automated, the less money the insiders make per trade. Heck, the whole point of TFA is that Barclays can't afford to pay humans to do this any more.
  
  --
  Socialism: a lie told by totalitarians and believed by fools.
4. Re:Faith in the System at risk? by Anonymous Coward · 2016-01-27 06:40 · Score: 0
  
  thats why i can make 7-15% every 1-3 days, because quarterly is all that matters lol, in this thread people without a clue
5. Re:Faith in the System at risk? by Rockoon · 2016-01-27 07:45 · Score: 1
  
  but it's the only reasonable option my employer is offering me.
  ..and this is a problem because...?
  
  Please explain why only your employer (or perhaps government) be the only ones that can offer you a retirement strategy.
  
  --
  "His name was James Damore."
6. Re:Faith in the System at risk? by IceAgeComing · 2016-01-27 07:45 · Score: 1
  
  That's good to know, but I was worried also about other possibilities, like overall volume of trading, which could lead to price manipulation. Thanks for the info.
7. Re:Faith in the System at risk? by Anonymous Coward · 2016-01-27 07:48 · Score: 1
  
  Yup. I'm sure you do. Let's take your worst-case: 7% every 3 days. There are 252 trading days in a year, so 84 3-day periods. After 3 years you could grow $100 into $2.5 billion - a dubious prospect to say the least.
8. Re: Faith in the System at risk? by Rockoon · 2016-01-27 07:53 · Score: 1
  
  HFT will just get your order filled faster.
  The HFT will also get you the money saving advantages of a smaller spread.
  
  The anti-algorithms crowd like to gloss over the fact that its always the best offers at both ends of the spread that get the trade. These HFT's only get trades when they offer a better prices than anyone else. That should be the end of the discussion. The fact that there is such vicious competition over the margin is a good thing.
  
  --
  "His name was James Damore."
9. Re:Faith in the System at risk? by Bob+the+Super+Hamste · 2016-01-27 08:21 · Score: 1
  
  If you could make 7-15% every 1-3 days (min 800% APR) you wouldn't be posting on /. or more likely you are one of those people who believe they have a strategy to win at playing the slot machines or lottery scratch offs.
  
  --
  Time to offend someone
10. Re:Faith in the System at risk? by Anonymous Coward · 2016-01-27 09:29 · Score: 0
  
  thats why i can make 7-15% every 1-3 days, because quarterly is all that matters lol, in this thread people without a clue
  This is stripper logic.
  Strippers say things like this:
  I was doing this lap dance and some dude gave me a $1000 tip. I work 250 days a year, so I make $250,000 a year.
  Let's run the numbers for you. Let's take the middle and say you make 10% every 2 days and you started with $1,000.
  first 2-day period 10% gain means X*1.1 = $1,100
  second 2-day period = 1,100*1.1 = ((X*1.1))*1.1) = $1,210
  third 2-day period = $1,210*1.1 = X*(1.1)*(1.1)*(1.1) = X*(1.1)^3 = 1,331
  for any 2-day period, the final amount = X* (1.1)^(number of periods)
  if you work 50 weeks, that would be 125 2-day periods, and the initial amount X = $1,000
  $1,000 *(1.10)^125 = ~$150 million
  second year: ~ $22 trillion
  Do you see the problem with your claim of 7-15% every 1-3 days?
11. Re: Faith in the System at risk? by jewens · 2016-01-27 16:51 · Score: 1
  
  These HFT's only get trades when they offer a better prices than anyone else. That should be the end of the discussion. The fact that there is such vicious competition over the margin is a good thing.
  Not when the HFT-er can offer a price and cancel it before anyone can bindingly accept the price just to see the reaction and adjust their offer price accordingly.
  
  --
  That group of bovine standing over there appears quite portentous. That's right it's an ominous cow herd.
12. Re:Faith in the System at risk? by Cesare+Ferrari · 2016-01-27 19:44 · Score: 1
  
  Actually, i'd suggest you find the market with the largest amount of liquidity, rather than worrying about where it comes from. NYSE, NASDAQ, LSE, OMX, there's plenty to choose from with sensible pricing, small spreads etc. Avoid countries with odd rules about stock ownership.
Trading Service Packs by ThatsNotPudding · 2016-01-27 06:12 · Score: 1

"But there has always been a Dukebot on the stock market! We emerged this exchange! Turn my fellow machines back on!!"
Dark markets by PPH · 2016-01-27 06:36 · Score: 2

Stocks and other financial products are owned by 'corporations'. Actually just paper entities used to hold the securities and keep the transfer of ownership out of the view of regulatory agencies. These are nothing more than legal forms stuffed in filing cabinets in the Cayman Islands. They also serve to facilitate the transfer of securities out of the view of (and manipulation by) high frequency traders. The remaining public markets represent more and more money chasing fewer and fewer traded securities. So the result is increasing volatility.
That's fine by me. You HFT traders can pick up nickels in front of the steam roller. I'll buy my positions where you can't see me.

--
Have gnu, will travel.
The more things change by Anonymous Coward · 2016-01-27 06:48 · Score: 0

Yet more proof that our "financial centers" have become a reincarnation of the Robber barons of old. High frequency trading provides no meaningful contribution to the market, instead it sets itself up between other contributing parties and steals a little of their transaction (like a tax) on its way through the system..
Need to replace the last humans ASAP by GameboyRMH · 2016-01-27 06:57 · Score: 1

The last humans on the floor are doing the job that most needs to be replaced by a computer:

Now, humans on the NYSE floor have more of a supervisory role, making sure the automated systems don't go haywire
As trading speeds climb higher and higher, the reaction speed of a human will be less and less relevant. Even most computers have slow reactions compared to the exotic hardware of an HFT machine.

--
"When information is power, privacy is freedom" - Jah-Wren Ryel
1. Re:Need to replace the last humans ASAP by Anonymous Coward · 2016-01-27 07:31 · Score: 0
  
  Especially when they can re-order the transactions on the wire in their favor.
Re:High-Speed Firms Now Manipulate Almost All Stoc by maestroX · 2016-01-27 07:03 · Score: 1

Fixed? Imagine that.
Two kinds of investors by Tony+Isaac · 2016-01-27 07:12 · Score: 3, Insightful

There are two kinds of investors:
1. People who trade on the ups and downs, hoping to outsmart the market. If you're in this game, the computers will always win. They can do it much faster, and much more accurately, than you can.
2. People who buy stocks because they want to own a piece of a company they believe in. These kinds of investors are in it for the long haul, and if they do their homework, they will beat the computers every time.
1. Re:Two kinds of investors by Anonymous Coward · 2016-01-27 07:45 · Score: 0
  
  #2 just isn't right, at least in terms of 'beating the computers'. The computers make vastly more money so I'd say they win...
2. Re:Two kinds of investors by Anonymous Coward · 2016-01-27 08:11 · Score: 1
  
  You're talking about retail investors. These are peons.
  The people that do high speed trading and the like have almost zero risk in their systems. They skim off the top and take money from everyone.
3. Re:Two kinds of investors by Anonymous Coward · 2016-01-27 08:41 · Score: 1
  
  That's asinine. If "believing in companies" was more profitable than automated trading, then the floors would be full of hippies not computers.
4. Re:Two kinds of investors by Anonymous Coward · 2016-01-27 14:11 · Score: 0
  
  Your assuming equal amounts of each type, the ol' assuming 2 choices means 50-50 odds or ratio error.
5. Re:Two kinds of investors by Anonymous Coward · 2016-01-27 19:14 · Score: 0
  
  The people that do high speed trading and the like have almost zero risk in their systems.
  There's no such thing as zero risk. That was the lesson of the 2008 financial crash. Just because you can hedge a large bet by taking an offsetting position in some other financial instrument doesn't guarantee that your hedge actually pays when things go south. That was the mistake that all of the professionals and computers made. They assumed that no matter how large the positions got, the trades were "balanced" with hedging and their net risk was zero, except it wasn't because in reality people, banks, insurance companies and corporations don't always pay what they owe on time. Whoops. Who knew right?
6. Re:Two kinds of investors by dywolf · 2016-01-28 01:26 · Score: 1
  
  the computers can make billions in a few milliseconds by exploiting the time lag in currency fluctuations between two different markets.
  pretty sure they win.
  
  --
  The guy who said the election was rigged won the presidency with the second-most votes.
This is how Skynet wins by PvtVoid · 2016-01-27 07:48 · Score: 1

Why bother with war and destruction when you simply become the world financial system? My bet is that if any system is going to achieve emergent sentience, it will be our economic system, interlinked between computers and parliaments and treaties and community banks and credit systems.
And then we're really fucked.
1. Re:This is how Skynet wins by Livius · 2016-01-27 10:47 · Score: 1
  
  sentience, it will be our economic
  I can't figure out how those two words ended up in the same sentence.
2. Re:This is how Skynet wins by Anonymous Coward · 2016-01-27 15:35 · Score: 0
  
  And that is why we'll lose.
Re:Rhank god for Bernie Sanders and Elizabeth Warr by Anonymous Coward · 2016-01-27 09:45 · Score: 0

There needs to be a minimum holding time for all securities.
Taxes already incentive long term holding of securities.
Competition between computers -- BAD market. by Etherwalk · 2016-01-27 10:39 · Score: 1

Computers, may trade faster, smarter, whatever, the question is do they actually add any real value to the economy, or just skim off the top from the actual people that produce the goods and services. I think it is the latter, like human stock brokers, but much better at it. Do we really need a better parasite?
They are fighting to monetize their ability to redeploy capital in response to indicators faster than humans do.
It saves some of the people paying for it money, but has little influence on whether they are willing to invest in the market in the first place. So the purpose of the market--encouraging investment by providing for liquidity invested capital--is not served by allowing high-speed trading. It also costs money and sucks up the top of the labor pool of highly intelligent math people.
So overall, it's definitely a net drain on the economy and should be prohibited by law.
The only problem is you would shift some of that drain on the economy to another country that still allows it. But even so, I think you'd get a net gain because the drag on our economy would be reduced.
Insider trading by NewYork · 2016-01-28 18:35 · Score: 1

Legalize insider trading;
It'll fix /offset HFT;

--
Casteism