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Goldman Sachs Automated Trading Replaces 600 Traders With 200 Engineers (technologyreview.com)
Goldman Sach's New York headquarters has replaced 600 of its traders with 200 computer engineers over the last two decades or so, thanks to automated trading programs. (Though, the effort to do so has accelerated over the past five years.) "Marty Chavez, the company's deputy chief financial officer and former chief information officer, explained all this to attendees at a symposium on computer's impact on economic activity held by Harvard's Institute for Applied Computational Science last month," reports MIT Technology Review. From their report: The experience of its New York traders is just one early example of a transformation of Goldman Sachs, and increasingly other Wall Street firms, that began with the rise in computerized trading, but has accelerated over the past five years, moving into more fields of finance that humans once dominated. Chavez, who will become chief financial officer in April, says areas of trading like currencies and even parts of business lines like investment banking are moving in the same automated direction that equities have already traveled. Today, nearly 45 percent of trading is done electronically, according to Coalition, a U.K. firm that tracks the industry. In addition to back-office clerical workers, on Wall Street machines are replacing a lot of highly paid people, too. Complex trading algorithms, some with machine-learning capabilities, first replaced trades where the price of what's being sold was easy to determine on the market, including the stocks traded by Goldman's old 600. Now areas of trading like currencies and futures, which are not traded on a stock exchange like the New York Stock Exchange but rather have prices that fluctuate, are coming in for more automation as well. To execute these trades, algorithms are being designed to emulate as closely as possible what a human trader would do, explains Coalition's Shahani. Goldman Sachs has already begun to automate currency trading, and has found consistently that four traders can be replaced by one computer engineer, Chavez said at the Harvard conference. Some 9,000 people, about one-third of Goldman's staff, are computer engineers.
The occasional market "crash" attributed to automated electronic trading ...
Some crashes have been attributed to automated trading, but later analysis has found that (so far) no crashes were caused primarily by automatic trading. In fact, the "flash crash" of 2010 was exacerbated by loss of liquidity as automatic traders pulled out because volatility exceeded parameters.
Humans panic. Computers don't.
Yea. Fuck them. If they want to maintain the illusion that markets (short term) are any different than Las Vegas, require all trades to be hands-on (by humans). No millisecond trades, require holding at least 5 minutes (as a start, a day or week should be the goal).. None of this automated bullshit, which just sucks profits away from investment for speculation. And, make the rules the same for all, no more fast trading for the patricians when the proles have to deal with settlement measured in days.
"National Security is the chief cause of national insecurity." - Celine's First Law
Honestly, blind traders are a burden on society. What i mean by blind traders is that people who are simply running gambling algorithms and living by the "buy low sell high" rule are a curse on society. It's also what makes it so that people lose tens of thousands of jobs due to "restructuring" because algorithmic traders won't generate trade volume unless someone publishes something in the newspaper. I actually have been sickened by the disgusting concept of a trading floor for decades. It's a group of ass hats running around from buzz to buzz and buying and selling things they don't understand and ruining lives.
Laws should be passed requiring traders to have to apply for permission to make each trade. What I mean is that all traders even the small ones should have the same requirements that major share holders have. So, you should be able to buy in, but you would have to release a statement of intent to trade and wait 7 days before the transaction takes place.
There is a disgusting belief, almost like a religion that suggests that gambling on shares with absolutely no regard for how it impacts society as a whole is "Free Market" and "Democracy". Bullshit. Gambling on stocks IS NOT the same as investing in companies. What is worse is that when you gamble on stocks, you believe you have the right to demand a company behaves in any way it takes to increase the value of those stocks to make you a profit. That's filth. It causes shitbacks at major companies to lay off 20% of their workforce and outsource to India because it will generate the buzz which will cause trading volumes to skyrocket. And if the direction is up, people will rake it in, if it's down, they'll short the hell out of it. And yet, you just killed a city and can't even tell me what the company actually does.
I will shit all over HFT and algorithmic trading because it legitimizes shitting all over millions of peoples lives without even having the first idea what company you're actually effecting. The stock market isn't like a casino. If you win or lose in a casino, only the casino and a small number of people may be impacted. When you treat wall street as a casino where you are allowed to count cards, you and your peers can actually destroy the financial health of entire cities. A program with a bug could collapse an entire company within a few seconds destroying lives.
Yes, I know there are upsides to trading as well. It gives legitimate investors a way to abandon sinking ships for example. This gives legitimate investors a better reason to make the investment when it's needed. But the downsides far outweigh the upsides.
Trading is a predatory business/career that focuses entirely on profit with absolutely no regard for the peoples lives it impacts.
Maybe trading should be restricted to only company stocks that are related to dumping trash in oceans, distributing child labor, sex trafficking and so forth. Trading requires about the same moral compass.
why we tolerate these people? I just realized I can't afford a house because of how the mathematics of mortgages work.
Such it up you clueless millennial whiner. You understand nothing, nothing at all.
Want to pay more principal early on in your loan? Just [...]
Many people will say your problems are due to your own personal choices.
They are not.
Certainly there's a certain group of people who make bad choices and ruin their lives, or who can't seem to get ahead.
But there's another group of people, who we used to call the "middle class", who make intelligent choices but who are on the brink of poverty, or falling into poverty, or generally having a tough time getting ahead.
We see articles here about the rising cost of education, and the answer is always "some people don't need higher education". We see articles about how few jobs there are, and the answer is always "move to where the jobs are". We see articles about outsourcing, and the opinions are "you lose your job, but the population benefits overall due to lowered costs".
We are gutting the middle class in this country, have been for about 20 years, and the overall sentiment is "expect less out of life". Don't expect to own a house, don't expect to send your kids to college, don't expect to live as long, don't expect to get paid more, don't expect to be able to pay your medical bills...
You're ahead of the curve by actually doing the calculations and trying to predict your finances - a lot of people up to 2009 didn't do that, and thought that they could have the same opportunities as people had in the 1980's.
There's lots of people who think everything's fine and will try to pin this back on you, but it's most likely not anything you did.
Don't listen to them.
Things are bad right now, and whether they will get better remains to be seen.
Trades should be taxed on a decay function of how long they're held.
Hold it for 10 milliseconds? 99.9% tax.
Hold it for 10 days? 25% tax.
Hold it for 10 years? Nearly no tax.
HFTers always harp on the liquidity thing. News flash, while liquidity is important, it's not the purpose of the market. Equal access is much more important.
And HFTers absolutely grab profits from everyone else making trades. On the average, HFT makes money. It doesn't make it by finding a customer or building a product, therefore it must come from other traders, Q.E.D.
It's like I'm in the supermarket reaching for an orange and some guy swoops in and buys all the oranges in the store and all the neighboring stores as well and then offers to sell me my orange for a penny more than the prices on shelf. "But," he cries helpfully, "I did you a favor because you can choose from three times as many oranges now!" I just wanted my damn orange for the listed price.
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