Ok. Note the prevalence of terms like "killed", "lying in a Dallas hospital", etc which show harm was incurred by being shot in the face.
But there should be no retroactive guilt or liability on my part, as there was no documented proof it was harmful before testing it.
Most countries don't make people criminals before they actually commit the crime in question. So this concern is probably trivially satisfied by whatever district you are in.
Well there's already been a high cost, the financial crisis in large part.
As the other replier noted, the recent financial crisis was not caused by any sort of fast trading. Leverage is the tool of choice you should be looking at. Your assumptions are wrong. But there are plenty of people in this boat.
What I think is dangerous is the tying of HFT and other market activities in erroneous ways to serious problems with financial markets and societies. I was thinking earlier today that what's really going on is that HFT (and related activities) puts stress on an economic system. If that system had systematic problems or faults, then it is possible that HFT can trigger a failure. But it's not by any means unique in this.
Another such activity is free speech. It too can trigger failures (such as the revelation of gratuitous and illegal NSA spying has triggered a modest failure for US intelligence). We normally don't blame such failures on free speech. We don't say, for example, that free speech caused intelligence agencies to spy on their citizens. But that's no more erroneous than claiming that fast trading resulted in the 50 to 1 debt to assets ratio that caused the real estate crisis.
The obvious two differences are that everyone generally benefits from free speech, while only an elite class of trader can benefit from fast trading and second, speech is easy to understand while fast trading is not. You open your mouth or type on the keyboard and you just did "speech". It takes a lot more work to succeed at fast trading.
Because trading stocks is about the transfer of investment, not the transfer of wealth.
And as a necessary precondition, an investor needs to be able to evaluate the value of potential investments. The market "should" provide assistance for this in terms of prices for the various securities offered as well as a means to correct prices that are inaccurate. That leads to speculation and trading strategies, else would be investors are just throwing darts and hoping they hit the right invisible dart board.
It's not a case of forbidden unless proven useful, it's a case of forbidden until proven harmless if there is potential for harm, which is quite different.
The "case" would fail, if its criteria is used on itself. It's simply disastrous to prevent all human activity which can't be proven to be harmless.
And some people make (or perhaps "made" since the term has long been out of favor) money day trading because they actually earn a consistent net gain. There is some market advantage to being a market maker - by this I mean any trader who trades frequently on a stock without intent to own or invest in the stock (such as a day trader).
For example, a market maker would quickly detect the entry of an unsubtle large buyer or seller (the "big order trading" I referred to), for example, which is valuable market information (it allows you to forecast short term price swings, for example).
If you read this entire thread, all rebuttals consist of two forms, first, an assertion without proof that things work the way that the original poster claimed with programs magically reading the transaction queue of the premier computerized stock markets and getting their orders out in front before a transaction can execute. The other is to claim, again without proof, that I'm ignorant of even the basics of how a market works. Both arguments are pretty stupid IMHO.
The thing you apparently don't get is that on such computerized markets, an offer which would result in a transaction is immediately processed for transaction. There's no letting the offer sit on the market for a period of time, short or long, before the market decides to close the transaction. But there's many markets and offers often appear on different markets. Then middlemen (who can be owners of these markets) can close the trade and reap benefits much like what was described earlier in the thread. Or maybe they run their own black pool and have rigged trading in favor of themselves or important clients.
The liquidity that people like to trumpet as a benefit of HFT is false. As soon as there's a problem in the markets where extra liquidity would be helpful, it immediately dries up because the algos don't want to take a loss either.
Liquidity should dry up when there's a large amount of uncertainty. I don't see the problem.
Enforce even a 2 second requirement on any transaction and the playing field would be leveled again.
Where's the evidence? I see a couple of people make unfounded claims. Sure, they are knowledgeable, but it remains that their words aren't backed by anything. OTOH, if I sniff someone's trade in the market queue and front that order before it can get to the market, then I'm insider trading. Last I checked, that's still illegal.
Where can I sign up to plug my algorithm directly into the market without having to pay $5+ per trade. Or is this one of those things where only the rich get to play?
Of course, it's pay 2 play. Why shouldn't it be?
Explain to us why the wealth should get to control the financial system.
Two reasons, it's mostly their money in play. And the ones running things tend to be competent.
The money is printed by the government so why can't we nationalize the banking system so it's controlled by the representatives of the people, rather than having congress be controlled by the banking system?
Because the representatives of the people fuck things up. I'd rather have a financial system that works because it's run by the people who already have the greatest interest in making sure that system works than a system that doesn't work because the representatives of the people broke it.
Investment is a collaborative strategy, a symbiosis. Programming "investment bots" to be predatory is not a good thing. It introduces parasites into the mix.
Why isn't it a good thing? It's definitely collaboration since it culls weak strategies and computer trading programs that are more vulnerable to such "predation".
The government isn't providing anything per "use" of the stock market. So that rationalization doesn't soar.
I can't say whether I believe that trading algorithms are misusing the market, but it would be completely rational for Congress to institute a usage tax on equity market transactions if they felt misuse was occurring.
Congress "feels" all sorts of things, many which are purely imaginary or feigned. I propose a much higher standard - actual documented harm rather than what the local crazy man convention decided to do that day.
They can see what order you have placed before it is fulfilled.
But they can't beat you to the market. They can't insert their order ahead of yours on the order queue without it becoming insider trading or a case of ESP.
There are 10 sell orders for $10 dollars, and 10 buy orders for market price. It takes a minute for a buyer to be matched up with a seller organically, and in the meantime the HFT algos buy up all of the $10 sell positions and immediately put new sell orders out for $10.50.
Doesn't work that way. The HFT order would be put on the queue and the above transactions would clear up first since they're ahead of it on the queue. Now if you're speaking of two different markets, a human paper-waving market and a computer trading market, then that's arbitrage between the two markets.
As long as there's risk, it's not arbitrage. A small risk over thousands or more orders can become a big risk. And the AC didn't say "big orders". And even a human market maker can move fast enough to exploit big order trading. That was as I see it one of the big reasons why some people could make money at day trading, for example.
So your view is that people should be able to make money no matter what the cost and that making money is the single key thing that should come above all else?
Yet again, the irrational bullshit comes out. Note I said "why anything needs to be done". What makes you think that I wouldn't have considered high "cost" a valid reason?
To turn the argument around, why do you think this sort of system should've been allowed in the first place?
A good question and here's some answers. First, the US is something of a democracy. That means people should be free to act in the absence of the above harm you speak of. So IF the activity doesn't harm someone, then a free country wouldn't ban the activity, be it gay marriage or some hypothetical harmless version of high frequency trading.
Second, it is foolish to ignore the benefit of an activity just because it doesn't directly benefit you. As I've noted before, fast trading generates liquidity in a market, quickens market response to new information, and funds some cool technology development that can be used for other things than just trading stocks. This activity also tests all those other computer trading programs out there, leading to better trading programs overall.
It's just a niche, but in turn the benefits of improving that niche flow to other sectors of the economy and eventually to you.
Third, the harm of fast trading is greatly overstated. Virtually every ill I've seen claimed of it is due either to unrelated policies (like too big to fail, insider trading, order fronting, "corporations", etc) or imaginary (the program figures out via ESP what you're going to do before you do it and then fronts your 100 share trade - griefing the markets!).
But it does. It enables transactions of assets in a low risk way that would otherwise have to rigged via a complex loan.
That objection would make sense if I had suggested delaying trades for days or longer periods, but I have made no such suggestion. In fact, I suspect that a delay of hours would be sufficient, if it would even take more than one of those. But you made assumptions, which shockingly turned out to be incorrect.
That is interesting. I meant corporations not fast trading. That the response also works for fast trading is happy coincidence.
The nature of corporations and that they are the primary benefactors of a bad law is always relevant when you're talking about the law.
unless you actually believe that ESP would be necessary to see what is about to happen in a market
Yep. When you're trying to predict someone's actions without some sort of information on what they're going to trade, then it is ESP.
I don't know if you've given any real thought to this at all: but before a buyer and a seller can meet to make a trade they both need to signal that they have the intention to do so.
Yea, that was done when the buyers and sellers got access to the stock market, which could have been years ago. There's no magic signal of intent to trade before an order is placed.
Higher liquidity is primarily a benefit to corporations, which are a legal fiction which has no reason to exist if it does not benefit the public.
But it does. It enables transactions of assets in a low risk way that would otherwise have to rigged via a complex loan. That employs people, gets things done, generates tax revenue, and generally improves the lot of society.
Straw man. We are currently specifically having a conversation in the context of discussing a problem which is caused by fast trading.
What problem? We're discussing phenomena of fast trading (such as the alleged "coalescing" of "flash mobs" of computer traders). We haven't actually gotten to any problems.
Straw man. You're talking about some nutter, which has nothing to do with me.
Whatever. I already am seeing the same sort of non sequiturs and unfounded claims. Why in the world, for example, did you bother to claim that "corporations, which are a legal fiction which has no reason to exist if it does not benefit the public" or that you had by making that uninteresting and irrelevant observation made a case for the banning of fast trade?
If the goal is to permit exchange of long-term investments, then there's no reason to permit rapid trading in any case.
Sure, there is. Higher liquidity and better market responsiveness to new knowledge.
There's all this talk about the best way to break the markets so really fast trading can't happen. But we're putting the cart before the horse. The case for banning fast trading doesn't exist. Most such reasons turn out either unrelated to fast trading (such as trading through a brokerage which fronts the trade by default because you made them the middle man in your transaction) or attributing mystical powers to fast trading (such as a poster earlier claiming that a computer program could "see what slow dim you are going to buy").
This sort of financial activities is complete economic nonsense, as it brings nothing of value to people, companies or other concerns that actually produce something useful to society as a whole.
There's the usual benefits of better market liquidity and faster market response. The arms race is also building some cool tech, meaning a boost for the high tech industry.
You probably don't bring much to society either. So what?
Just reading the/. blurb should be enough to convince anyone that "robot trading" is a parasitic activity that should be taxed to oblivion - by ways of a tax based on the speed of trading for instance - and financial markets forced to become what they're supposed to be: places for investors to invest in real economic activities for the long haul.
And why should we do that and how is it going to do a thing for long term economic investment?
If instead you actually want to do something useful for long term investment, then get rid of Too Big to Fail and other business welfare, and most, if not all, protectionism schemes.
Blame transference is an interesting thing. So it's the Tea Party's fault that your "professional" politicians aren't remotely competent and can't get anything done? Too bad. Those tea partiers vote too. So that means they aren't going away either.
Slashdot Mirror
But there should be no retroactive guilt or liability on my part, as there was no documented proof it was harmful before testing it.
Most countries don't make people criminals before they actually commit the crime in question. So this concern is probably trivially satisfied by whatever district you are in.
Well there's already been a high cost, the financial crisis in large part.
As the other replier noted, the recent financial crisis was not caused by any sort of fast trading. Leverage is the tool of choice you should be looking at. Your assumptions are wrong. But there are plenty of people in this boat.
What I think is dangerous is the tying of HFT and other market activities in erroneous ways to serious problems with financial markets and societies. I was thinking earlier today that what's really going on is that HFT (and related activities) puts stress on an economic system. If that system had systematic problems or faults, then it is possible that HFT can trigger a failure. But it's not by any means unique in this.
Another such activity is free speech. It too can trigger failures (such as the revelation of gratuitous and illegal NSA spying has triggered a modest failure for US intelligence). We normally don't blame such failures on free speech. We don't say, for example, that free speech caused intelligence agencies to spy on their citizens. But that's no more erroneous than claiming that fast trading resulted in the 50 to 1 debt to assets ratio that caused the real estate crisis.
The obvious two differences are that everyone generally benefits from free speech, while only an elite class of trader can benefit from fast trading and second, speech is easy to understand while fast trading is not. You open your mouth or type on the keyboard and you just did "speech". It takes a lot more work to succeed at fast trading.
Because trading stocks is about the transfer of investment, not the transfer of wealth.
And as a necessary precondition, an investor needs to be able to evaluate the value of potential investments. The market "should" provide assistance for this in terms of prices for the various securities offered as well as a means to correct prices that are inaccurate. That leads to speculation and trading strategies, else would be investors are just throwing darts and hoping they hit the right invisible dart board.
It's not a case of forbidden unless proven useful, it's a case of forbidden until proven harmless if there is potential for harm, which is quite different.
The "case" would fail, if its criteria is used on itself. It's simply disastrous to prevent all human activity which can't be proven to be harmless.
And some people make (or perhaps "made" since the term has long been out of favor) money day trading because they actually earn a consistent net gain. There is some market advantage to being a market maker - by this I mean any trader who trades frequently on a stock without intent to own or invest in the stock (such as a day trader).
For example, a market maker would quickly detect the entry of an unsubtle large buyer or seller (the "big order trading" I referred to), for example, which is valuable market information (it allows you to forecast short term price swings, for example).
If you read this entire thread, all rebuttals consist of two forms, first, an assertion without proof that things work the way that the original poster claimed with programs magically reading the transaction queue of the premier computerized stock markets and getting their orders out in front before a transaction can execute. The other is to claim, again without proof, that I'm ignorant of even the basics of how a market works. Both arguments are pretty stupid IMHO.
The thing you apparently don't get is that on such computerized markets, an offer which would result in a transaction is immediately processed for transaction. There's no letting the offer sit on the market for a period of time, short or long, before the market decides to close the transaction. But there's many markets and offers often appear on different markets. Then middlemen (who can be owners of these markets) can close the trade and reap benefits much like what was described earlier in the thread. Or maybe they run their own black pool and have rigged trading in favor of themselves or important clients.
The liquidity that people like to trumpet as a benefit of HFT is false. As soon as there's a problem in the markets where extra liquidity would be helpful, it immediately dries up because the algos don't want to take a loss either.
Liquidity should dry up when there's a large amount of uncertainty. I don't see the problem.
Enforce even a 2 second requirement on any transaction and the playing field would be leveled again.
Why should the playing field be level?
Where's the evidence? I see a couple of people make unfounded claims. Sure, they are knowledgeable, but it remains that their words aren't backed by anything. OTOH, if I sniff someone's trade in the market queue and front that order before it can get to the market, then I'm insider trading. Last I checked, that's still illegal.
Where can I sign up to plug my algorithm directly into the market without having to pay $5+ per trade. Or is this one of those things where only the rich get to play?
Of course, it's pay 2 play. Why shouldn't it be?
Explain to us why the wealth should get to control the financial system.
Two reasons, it's mostly their money in play. And the ones running things tend to be competent.
The money is printed by the government so why can't we nationalize the banking system so it's controlled by the representatives of the people, rather than having congress be controlled by the banking system?
Because the representatives of the people fuck things up. I'd rather have a financial system that works because it's run by the people who already have the greatest interest in making sure that system works than a system that doesn't work because the representatives of the people broke it.
Investment is a collaborative strategy, a symbiosis. Programming "investment bots" to be predatory is not a good thing. It introduces parasites into the mix.
Why isn't it a good thing? It's definitely collaboration since it culls weak strategies and computer trading programs that are more vulnerable to such "predation".
Usage taxes are very common.
The government isn't providing anything per "use" of the stock market. So that rationalization doesn't soar.
I can't say whether I believe that trading algorithms are misusing the market, but it would be completely rational for Congress to institute a usage tax on equity market transactions if they felt misuse was occurring.
Congress "feels" all sorts of things, many which are purely imaginary or feigned. I propose a much higher standard - actual documented harm rather than what the local crazy man convention decided to do that day.
They can see what order you have placed before it is fulfilled.
But they can't beat you to the market. They can't insert their order ahead of yours on the order queue without it becoming insider trading or a case of ESP.
There are 10 sell orders for $10 dollars, and 10 buy orders for market price. It takes a minute for a buyer to be matched up with a seller organically, and in the meantime the HFT algos buy up all of the $10 sell positions and immediately put new sell orders out for $10.50.
Doesn't work that way. The HFT order would be put on the queue and the above transactions would clear up first since they're ahead of it on the queue. Now if you're speaking of two different markets, a human paper-waving market and a computer trading market, then that's arbitrage between the two markets.
As long as there's risk, it's not arbitrage. A small risk over thousands or more orders can become a big risk. And the AC didn't say "big orders". And even a human market maker can move fast enough to exploit big order trading. That was as I see it one of the big reasons why some people could make money at day trading, for example.
So your view is that people should be able to make money no matter what the cost and that making money is the single key thing that should come above all else?
Yet again, the irrational bullshit comes out. Note I said "why anything needs to be done". What makes you think that I wouldn't have considered high "cost" a valid reason?
To turn the argument around, why do you think this sort of system should've been allowed in the first place?
A good question and here's some answers. First, the US is something of a democracy. That means people should be free to act in the absence of the above harm you speak of. So IF the activity doesn't harm someone, then a free country wouldn't ban the activity, be it gay marriage or some hypothetical harmless version of high frequency trading.
Second, it is foolish to ignore the benefit of an activity just because it doesn't directly benefit you. As I've noted before, fast trading generates liquidity in a market, quickens market response to new information, and funds some cool technology development that can be used for other things than just trading stocks. This activity also tests all those other computer trading programs out there, leading to better trading programs overall.
It's just a niche, but in turn the benefits of improving that niche flow to other sectors of the economy and eventually to you.
Third, the harm of fast trading is greatly overstated. Virtually every ill I've seen claimed of it is due either to unrelated policies (like too big to fail, insider trading, order fronting, "corporations", etc) or imaginary (the program figures out via ESP what you're going to do before you do it and then fronts your 100 share trade - griefing the markets!).
But it does. It enables transactions of assets in a low risk way that would otherwise have to rigged via a complex loan.
That objection would make sense if I had suggested delaying trades for days or longer periods, but I have made no such suggestion. In fact, I suspect that a delay of hours would be sufficient, if it would even take more than one of those. But you made assumptions, which shockingly turned out to be incorrect.
That is interesting. I meant corporations not fast trading. That the response also works for fast trading is happy coincidence.
The nature of corporations and that they are the primary benefactors of a bad law is always relevant when you're talking about the law.
We weren't speaking of such bad law.
I see you ran out of answers. Good, maybe you'll think next time.
unless you actually believe that ESP would be necessary to see what is about to happen in a market
Yep. When you're trying to predict someone's actions without some sort of information on what they're going to trade, then it is ESP.
I don't know if you've given any real thought to this at all: but before a buyer and a seller can meet to make a trade they both need to signal that they have the intention to do so.
Yea, that was done when the buyers and sellers got access to the stock market, which could have been years ago. There's no magic signal of intent to trade before an order is placed.
Higher liquidity is primarily a benefit to corporations, which are a legal fiction which has no reason to exist if it does not benefit the public.
But it does. It enables transactions of assets in a low risk way that would otherwise have to rigged via a complex loan. That employs people, gets things done, generates tax revenue, and generally improves the lot of society.
Straw man. We are currently specifically having a conversation in the context of discussing a problem which is caused by fast trading.
What problem? We're discussing phenomena of fast trading (such as the alleged "coalescing" of "flash mobs" of computer traders). We haven't actually gotten to any problems.
Straw man. You're talking about some nutter, which has nothing to do with me.
Whatever. I already am seeing the same sort of non sequiturs and unfounded claims. Why in the world, for example, did you bother to claim that "corporations, which are a legal fiction which has no reason to exist if it does not benefit the public" or that you had by making that uninteresting and irrelevant observation made a case for the banning of fast trade?
The relevance is that they're both cases of activities with minor consequences that someone thinks should be heavily punished, just because.
They don't have ESP, but they can see buy orders before they are executed.
Then that's insider trading. The US has laws on the books for that.
If the goal is to permit exchange of long-term investments, then there's no reason to permit rapid trading in any case.
Sure, there is. Higher liquidity and better market responsiveness to new knowledge.
There's all this talk about the best way to break the markets so really fast trading can't happen. But we're putting the cart before the horse. The case for banning fast trading doesn't exist. Most such reasons turn out either unrelated to fast trading (such as trading through a brokerage which fronts the trade by default because you made them the middle man in your transaction) or attributing mystical powers to fast trading (such as a poster earlier claiming that a computer program could "see what slow dim you are going to buy").
This sort of financial activities is complete economic nonsense, as it brings nothing of value to people, companies or other concerns that actually produce something useful to society as a whole.
There's the usual benefits of better market liquidity and faster market response. The arms race is also building some cool tech, meaning a boost for the high tech industry.
You probably don't bring much to society either. So what?
Just reading the /. blurb should be enough to convince anyone that "robot trading" is a parasitic activity that should be taxed to oblivion - by ways of a tax based on the speed of trading for instance - and financial markets forced to become what they're supposed to be: places for investors to invest in real economic activities for the long haul.
And why should we do that and how is it going to do a thing for long term economic investment?
If instead you actually want to do something useful for long term investment, then get rid of Too Big to Fail and other business welfare, and most, if not all, protectionism schemes.
Every time I buy a stock or sell one, the IRS and other taxing authorities suck some money out of me.
When these computers buy and sell shares several times a second, they do not get taxed. That is not fair.
I'm pretty sure the IRS gets their cut too. But they get a cut of profits just like they do of your profits.
There should be a tax maybe .001 cents per transaction.
Why? No one has explained why anything needs to be done at all. It's all "rich people are making money therefore we need to screw it up for them".
That would cut the amount of chatter and computer predation.
And why is that considered a good thing? I think we need more chatter and computer predation.
Some of these systems see what slow dim you are going to buy, jump ahead of you in line, buy it and then sell it to you.
No, they don't. They don't have ESP. They can't see what you do on a market before you actually do something on the market.
Blame transference is an interesting thing. So it's the Tea Party's fault that your "professional" politicians aren't remotely competent and can't get anything done? Too bad. Those tea partiers vote too. So that means they aren't going away either.