There is no line, and no difference. So it's never clear cut. If you could look at company report and decide whether that stock was worth, we wouldn't need a market. We'd just plug the numbers into a computer that would tell you what it was worth, and before you could go buy the stock, it would trade at that price. Why is it that fundamental analysts differ in their target prices?
In fact, everyone who trades in the market faces uncertainty. Why would you say one guy is more useful than the other?
Whatever frequency of trading you're talking about, it's more expensive for the farmer/factory to sell/buy if the market is illiquid. Sure, most of the trading by far is too fast for Nestle to notice, but the guys they just bought a huge load of coffee from need to distribute the risk too.
And guess what, they also don't need to trade every 100ms. Heck, if you want to trace it all the way back, you can be pretty dang sure that the farmer doesn't make sales every 100ms either! The "liquidity" is several orders of magnitude faster than any business in the supply chain would notice; making the trades "high liquidity" (which also makes the tender times short) gives no advantage to the business customer but certainly does give the bank an advantage -- the bank does want higher liquidity so it can take advantage of the delay in the customer's behaviour.
Onions aren't futures traded by law, and they're more volatile.
False experiment. The question is not whether hedging should be banned but about whether increased frequency of trading on hedges gives any benefit.
They don't need to, but why stop them? They're only trading amongst themselves. The customer gets a better price when he decides to come in. How's that bad for him?
Not a false experiment. The volatility is caused by illiquidity. No market makers, who always trade faster than farmers/factories, thus prices are wide and intransparent. Farmer comes in, loses a wider spread. Simple.
is that it's pretty similar to what everyone else on the street does. In the end, they hire the same people, from the same universities, to make money in the same way. These people then move around among the same firms. The only reason we can't compare is of course that all the code is secret.
GS are just pretending the guy's stuff is valuable. And maybe it seems like it too, when you can't see everyone else's stuff.
The sum effect of these actions is parasitic to actual investors leading to a diminished "social utility". (whatever that is supposed to mean.)
By "actual investors" presumeably you mean people who buy and hold? They benefit from tighter prices. Also, they are not as sensitive to short term price fluctuation. So how are they worse off?
You seem to be under the impression that investments are good, but speculation is bad. Actually, they can't be distinguished.
Someone trades, with some sort of motivation, expecting to make money on some timescale. For some reason, people think that long timescales and "fundamental analysis" give you investment, but short timescale and technical analysis give you speculation.
Also, please note that when you buy stocks, the company doesn't receive any of that money. You might want to think about why there's a stock market in the first place....
That's right. Liquidity. If people couldn't dump their shares at a reasonable price, they'd never put money into new businesses in the first place. The market makers and HFTs ensure there's someone to dump those shares on.
Anyone can buy the right to see the data in that 30ms window. I don't think it's great that Nasdaq allows this, but how is it unfair? You can go and buy a server in a colo centre as well, and write your own program to trade with it.
High frequency trading is ultimately a scourge, the mechanic they use is a bit of sleight of hand to take advantage of momentary price fluctuations which leave them in the position where they're able to slam in an order for a guaranteed future profit, where other investors are locked out. It's something that I could do as well, if I were told what the price would be in the future and had the means of slamming in a bid in time to capitalize on it. There's little value to that sort of high finance piracy.
In what way is the profit guaranteed? All they can see is where a bunch of orders are. Can you tell me how that orderbook data can be used to guarantee a profit? No, I mean show me properly. Here's an orderbook with some prices, which you can see before everyone else, but only by a few milliseconds, and there's other HFTs as well. What do you do with it? Remember, you have to pay costs.
Whatever frequency of trading you're talking about, it's more expensive for the farmer/factory to sell/buy if the market is illiquid. Sure, most of the trading by far is too fast for Nestle to notice, but the guys they just bought a huge load of coffee from need to distribute the risk too. If you don't let them, guess what? Your coffee is more expensive.
This experiment has been tried, btw. Onions aren't futures traded by law, and they're more volatile.
That game is already being played, it's called the end of day auction. I used to to work for a firm that did this, and it was very profitable for them. If you change it to 60s auctions, well, then people will play that game. You won't be helping whatever cause you think it right.
Did you keep track of who expressed which opinion, or are you thinking that Slashdot is some amorphous mass of shifting humanity, except maybe for you?
Definitely AMOSH. What else do you call a site with this many users/opinions?
Hate to break this to you but you already do, climate models work on the same finite element algorithims as any other engineering model does when there is no anylitical solution to the equations. Computers have been doing this type of numerical analysis since they were first invented and took over the job of producing artilery tables. Such methods have revolutionised both science and engineering over the pats 50yrs to the point that no major engineering project would dare contemplate not using them.
There's a big difference between various uses of finite element models. In the end, that's just a mathematical way of determining how a big system will work, given that you know how a little piece works.
We know a few things about airplanes (though turbulence is a bit of a hole), and people are reasonably confident it has something to do with the air moving over the plane, and the shape of the plane. We can test this by trying out various shapes in various wind conditions, using wind tunnels, which provide an independent test each time.
With the climate, there seem to be quite a few variables, and that's always a problem since they interact. There's also the problem that each part of the earth seems to affect it's neighbours, so you don't have a bunch of independent tests. If we had some more Earths to look at, that would be useful, but we've only got the one. So, even though we're using the same mathematical methods, I'd guess our confidence in the climate model is less than in the airplane model.
This is not to say I don't believe in the big picture of climate change, just that applying the same method can't possibly give you the same confidence.
I find it strange that people think the scientific method is based on a philosophy or ideology. What scientists do is no different from what us common folk do when we debug a program or try to fix a mechanical system: you notice something funny (program gives wrong result, car won't start, water rising in basement) so you or the called-in expert speculates on the cause and then proceed on the basis of that speculation. If the facts don't bear it out, you pause, scratch your head and come up with a new speculation. Repeat as needed.
AFAICT even the most uneducated of us operate the same way in whatever we do. I suspect it's instinct, or at least such a basic result of the exercise of intelligence that no intelligent species could avoid operating that way.
The thing is, you need a framework for deciding which hypotheses to test. Some people would pray to God, or do some other Cargo Cult method, like kicking the TV. The ideology part of it comes in when you decide only to try ideas that could potentially be shown to not be correct. Add to it reproducibility (how many people will retry fixing a formerly broken TV?) and prediction of as yet unseen events, and you're pretty much there.
How is money (or time for that matter) a measure of benefit?
What I'm getting at is that some people think of donations as a kind of "guilt money". I don't think of it like that, but some do. Now, if it's guilt money, it's pretty similar to a fine.
Surely, with security operations being so large, it needs to be written down somewhere who's who. Or else you get cases like in the Infernal Affairs trilogy where the informants only contact is killed. Makes for an exciting movie though.
This whole WikiLeaks thing got me thinking: How do we know that things labelled "secret" by the government actually deserve to be so labelled? Who ought to have authority over such decisions? There's no way to discuss these things without spilling the beans. Even with guidelines, there will always be borderline cases, as well as decision makers ignoring the rules.
I can't see "everything should be public" as a sensible principle. Yet I can't see "let XYZ person/people decide on our behalf" as reasonable either.
Slashdot Mirror
There is no line, and no difference. So it's never clear cut. If you could look at company report and decide whether that stock was worth, we wouldn't need a market. We'd just plug the numbers into a computer that would tell you what it was worth, and before you could go buy the stock, it would trade at that price. Why is it that fundamental analysts differ in their target prices?
In fact, everyone who trades in the market faces uncertainty. Why would you say one guy is more useful than the other?
You've hit upon the one part of this HFT thing that actually needs to be investigated. Quote stuffing IS an abuse of the market.
What this graph is showing is a computerized way to do what market makers in any market have always done, for centuries.
Whatever frequency of trading you're talking about, it's more expensive for the farmer/factory to sell/buy if the market is illiquid. Sure, most of the trading by far is too fast for Nestle to notice, but the guys they just bought a huge load of coffee from need to distribute the risk too.
And guess what, they also don't need to trade every 100ms. Heck, if you want to trace it all the way back, you can be pretty dang sure that the farmer doesn't make sales every 100ms either! The "liquidity" is several orders of magnitude faster than any business in the supply chain would notice; making the trades "high liquidity" (which also makes the tender times short) gives no advantage to the business customer but certainly does give the bank an advantage -- the bank does want higher liquidity so it can take advantage of the delay in the customer's behaviour.
Onions aren't futures traded by law, and they're more volatile.
False experiment. The question is not whether hedging should be banned but about whether increased frequency of trading on hedges gives any benefit.
They don't need to, but why stop them? They're only trading amongst themselves. The customer gets a better price when he decides to come in. How's that bad for him?
Not a false experiment. The volatility is caused by illiquidity. No market makers, who always trade faster than farmers/factories, thus prices are wide and intransparent. Farmer comes in, loses a wider spread. Simple.
is that it's pretty similar to what everyone else on the street does. In the end, they hire the same people, from the same universities, to make money in the same way. These people then move around among the same firms. The only reason we can't compare is of course that all the code is secret.
GS are just pretending the guy's stuff is valuable. And maybe it seems like it too, when you can't see everyone else's stuff.
Someone arrest this man!
And they came back within the hour. Real market makers would have precipitated a proper meltdown, with repercussions for everyone who wasn't an HFT.
The sum effect of these actions is parasitic to actual investors leading to a diminished "social utility". (whatever that is supposed to mean.)
By "actual investors" presumeably you mean people who buy and hold? They benefit from tighter prices. Also, they are not as sensitive to short term price fluctuation. So how are they worse off?
You seem to be under the impression that investments are good, but speculation is bad. Actually, they can't be distinguished.
Someone trades, with some sort of motivation, expecting to make money on some timescale. For some reason, people think that long timescales and "fundamental analysis" give you investment, but short timescale and technical analysis give you speculation.
Also, please note that when you buy stocks, the company doesn't receive any of that money. You might want to think about why there's a stock market in the first place....
That's right. Liquidity. If people couldn't dump their shares at a reasonable price, they'd never put money into new businesses in the first place. The market makers and HFTs ensure there's someone to dump those shares on.
Anyone can buy the right to see the data in that 30ms window. I don't think it's great that Nasdaq allows this, but how is it unfair? You can go and buy a server in a colo centre as well, and write your own program to trade with it.
High frequency trading is ultimately a scourge, the mechanic they use is a bit of sleight of hand to take advantage of momentary price fluctuations which leave them in the position where they're able to slam in an order for a guaranteed future profit, where other investors are locked out. It's something that I could do as well, if I were told what the price would be in the future and had the means of slamming in a bid in time to capitalize on it. There's little value to that sort of high finance piracy.
In what way is the profit guaranteed? All they can see is where a bunch of orders are. Can you tell me how that orderbook data can be used to guarantee a profit? No, I mean show me properly. Here's an orderbook with some prices, which you can see before everyone else, but only by a few milliseconds, and there's other HFTs as well. What do you do with it? Remember, you have to pay costs.
High frequency trading has no social benefit. If wikileaks could leak all source code of that type I would applaud it.
Is the market a vehicle for "social benefit"? If it is, why doesn't the market take a "rake" from all the profits to use towards "social benefit"?
(hint: because it isn't a vehicle for "social benefit)
Because you benefit by having the market available. You don't even have to participate to benefit.
Whatever frequency of trading you're talking about, it's more expensive for the farmer/factory to sell/buy if the market is illiquid. Sure, most of the trading by far is too fast for Nestle to notice, but the guys they just bought a huge load of coffee from need to distribute the risk too. If you don't let them, guess what? Your coffee is more expensive.
This experiment has been tried, btw. Onions aren't futures traded by law, and they're more volatile.
That game is already being played, it's called the end of day auction. I used to to work for a firm that did this, and it was very profitable for them. If you change it to 60s auctions, well, then people will play that game. You won't be helping whatever cause you think it right.
Who makes money from the current patent system? Lawyers, on both sides. We should change the laws.
What kind of people get elected to Congress?
http://answers.yahoo.com/question/index?qid=20071025191741AAnHym8
Oh crap.
With all the libertarians on here...
Did you keep track of who expressed which opinion, or are you thinking that Slashdot is some amorphous mass of shifting humanity, except maybe for you?
Definitely AMOSH. What else do you call a site with this many users/opinions?
And why should Amazon be the one to stand up for Wikileaks? Because they got picked first?
Hate to break this to you but you already do, climate models work on the same finite element algorithims as any other engineering model does when there is no anylitical solution to the equations. Computers have been doing this type of numerical analysis since they were first invented and took over the job of producing artilery tables. Such methods have revolutionised both science and engineering over the pats 50yrs to the point that no major engineering project would dare contemplate not using them.
There's a big difference between various uses of finite element models. In the end, that's just a mathematical way of determining how a big system will work, given that you know how a little piece works.
We know a few things about airplanes (though turbulence is a bit of a hole), and people are reasonably confident it has something to do with the air moving over the plane, and the shape of the plane. We can test this by trying out various shapes in various wind conditions, using wind tunnels, which provide an independent test each time.
With the climate, there seem to be quite a few variables, and that's always a problem since they interact. There's also the problem that each part of the earth seems to affect it's neighbours, so you don't have a bunch of independent tests. If we had some more Earths to look at, that would be useful, but we've only got the one. So, even though we're using the same mathematical methods, I'd guess our confidence in the climate model is less than in the airplane model.
This is not to say I don't believe in the big picture of climate change, just that applying the same method can't possibly give you the same confidence.
I find it strange that people think the scientific method is based on a philosophy or ideology. What scientists do is no different from what us common folk do when we debug a program or try to fix a mechanical system: you notice something funny (program gives wrong result, car won't start, water rising in basement) so you or the called-in expert speculates on the cause and then proceed on the basis of that speculation. If the facts don't bear it out, you pause, scratch your head and come up with a new speculation. Repeat as needed.
AFAICT even the most uneducated of us operate the same way in whatever we do. I suspect it's instinct, or at least such a basic result of the exercise of intelligence that no intelligent species could avoid operating that way.
The thing is, you need a framework for deciding which hypotheses to test. Some people would pray to God, or do some other Cargo Cult method, like kicking the TV. The ideology part of it comes in when you decide only to try ideas that could potentially be shown to not be correct. Add to it reproducibility (how many people will retry fixing a formerly broken TV?) and prediction of as yet unseen events, and you're pretty much there.
Yes, indeed.
How is money (or time for that matter) a measure of benefit?
What I'm getting at is that some people think of donations as a kind of "guilt money". I don't think of it like that, but some do. Now, if it's guilt money, it's pretty similar to a fine.
would be time. A rich guy like Bill Gates could give away 99% of what he's worth and still be rich. We each only have 24 hours a day though.
to wait until after bonuses have been paid out!
Surely, with security operations being so large, it needs to be written down somewhere who's who. Or else you get cases like in the Infernal Affairs trilogy where the informants only contact is killed. Makes for an exciting movie though.
This whole WikiLeaks thing got me thinking: How do we know that things labelled "secret" by the government actually deserve to be so labelled? Who ought to have authority over such decisions? There's no way to discuss these things without spilling the beans. Even with guidelines, there will always be borderline cases, as well as decision makers ignoring the rules.
I can't see "everything should be public" as a sensible principle. Yet I can't see "let XYZ person/people decide on our behalf" as reasonable either.