What do you mean no? My statement is quite relevant to the discussion: I'm pointing out the desires of the funding sources aren't always about near future utility. They may very well desire science for the sake of science.
It's a tautology. You need to say such things first. I can only discuss what you actually wrote. As to your elaboration, it's fine if the funding source wishes to fund science for the sake of science. That's just not the case with public funding which is a big part of this issue.
But it's not all crap or scientific activities would be on the scale of bridge clubs or crossword puzzle enthusiasts.
I never said it's all crap. That's not how Sturgeon's Law works. I'm saying you can't help but end up funding a lot of duds. There is no panacea to pin point what research "should" be funded and which shouldn't
The point is that the vast portion of scientific funding happens because of the small part that has value not the huge part that didn't work out.
Irrelevant to your original assertion since he found value in even the less fruitful activities.
It's very relevant. I'm showing how he didn't just magically found value without a lot of trial and error. I'm showing how even the best inventors accept a high rate of failure, and how instead of seeing failure as some bad thing that ought to eliminated in some collectivist controlled system, you just accept it as a learning experience.
No one made the mistake of seeing failure as a bad thing, hence why your observation is irrelevant to the argument. What I'm talking about is rationalizing scientific activities on grounds that can't be and never need be verified before the funding is long gone. That's ideal grounds for committing outright fraud, which is IMHO happening to a lot of the big projects (and many of the little ones) out there.
The problem as I see it, is that when you don't have any grounds for evaluating the near future potential of scientific work, then productive scientists look exactly like ones who won't ever deliver scientific output of note. It's not the possibly high failure rate of the activity, but the inability to distinguish between someone with a high failure rate and a few good successes and someone who will never have successes.
Two things to note here. First, one can't do the above without making trades. Second, HFT just makes the process a little quicker. One could do this probing by hand.
This is a well known problem that comes from deciding to make big, sudden moves (such as selling suddenly a zillion shares of company stock). You're going to move the price and it's going to cost you more. HFT just means that the market makers figure your plan out sooner than they did before.
You are claiming that 70% of volume means HFT is somehow significant. It's not. It's still the same market makers as before, doing the same activities they've done before, taking a similar piece of the action as before, but doing so on a finer time scale.
Science is simply the discovery of knowledge. Nowhere does it require the discovered knowledge to have near future utility, or even productive uses.
No, we're discussing the funding of scientific activities and to some degree, the public funding of such. In that case, the activity in question should reflect the desires of the funding sources.
The way I see it, Sturgeon's law applies to science. So you can't avoid having a great deal of your research money leading to crap, a great deal of research results not being productive,
But it's not all crap or scientific activities would be on the scale of bridge clubs or crossword puzzle enthusiasts.
Even a famous inventor (as in, he's not doing it for SCIENCE, he's looking for ways to use science in a productive manner) once said: I did not fail 10000 times. I succeed in finding 10000 ways which did not work.
Irrelevant to your original assertion since he found value in even the less fruitful activities.
People looked at what Bhor had shown, and what Enstein had shown and said, if we put money into this we can make power, or bombs.
And that "basic research" explained otherwise puzzling real world phenomena. If you're dumping a bunch of money into experimental physics, then a model that better explains the phenomena you're looking at is big leverage.
Without the pure basic research that came before it, we'd have nothing.
Nonsense, we would as we did, explore relevant basic science as part of the overall scheme.
I think the problem isn't whether money is spent on basic research, but rather what approach we use for basic research. If we fund basic science because it has near future utility, then we're doing a good approach. The money we spend has some concrete intent to it, and more importantly, we have a metric of how well we're doing and whether the money is spent well.
But if we spend money on SCIENCE without regard to the value of the research, we're going to end up with greatly unproductive efforts. That's what I see current advocacy of basic science as. It's an attempt to evade responsibility and accountability, not an attempt to do more basic science.
The problem facing research and development today is that there is not nearly enough focus on basic research - everything is about immediate, applied applications - which is the highest risk type of research you can do, since the goal is "build a very specific thing".
Clearly a quote from someone working in basic research, So I'm to believe that there's research out there for which you can't come up with an "elevator pitch" of near future benefits? Why fund it then? My view is that if you can't justify your efforts with near future benefits, then it is welfare not research.
One merely needs to look at history to see that every significant development has had near future application. Electricity? Lightning rods. Relativity? Explains much of those funky astronomy and physics observations. Number theory? Codes for encryption, better algorithm development (eg, among the earliest would be how to add, multiply, and divide by hand), and astronomy calculations.
And it doesn't broaden your horizons since you're aiming at specific targets informed by existing theory.
That's never been true in the past. Even very specific research requires novel knowledge and development of technologies to handle the task. For example, there was yet another story on high frequency trading. Research in that area has a very narrow focus - make money by millisecond to microsecond scale trading. But to get there, one needs developments in computer technology, algorithm design (namely, how to quickly make decisions on those time scales and how to generate profitable economic models on those time scales), and some game theory and stochastic calculus.
So does any other research that pushes the envelop. If it was straightforward to do something, then it probably wouldn't need to be researched.
So that is two of the hidden truths of this whole debate. Valuable science has always had near future application and a lot of "immediate, applied applications" is basic science.
HFT will continue to destabilize the stock market.
So what? It's worth noting here that inherent instability is not necessarily a bad thing for a system. For example, modern fighter jets are inherently unstable and use sophisticated control systems to keep in the air. When you have a system that you want to respond quickly to new information, such as a stock market, then instability is an advantage.
Suggesting that 70% of all trades have no impact on a market takes a very special kind of person.
It's these illogical statements that bring me to post time and time again. Volume of trades doesn't imply anything of significance is going on. Nor do so-called "flash crashes". DarkOx's post remains relevant.
I merely pointed out that those problems have already been solved. No need to invade anyone or other illogical gibberish. Sure, it'd be nice if those things were a bit cheaper and easier, since they could be implemented with less infrastructure and sooner which would save and improve many lives.
It's worth noting that in the overall mission they generally get by with one or two 9's of reliability. There's no 100% reliability out there and nobody would be able to afford it, if there was.
1. Cheap and easy ways to clean water for the world
2. Cheap and easy ways to provide light for the world
3. Cheap and easy ways to feed the world
4. Cheap and easy ways to maintain sanitation
5. Cheap and easy ways to provide education to the world.
All solved problems. Just use the developed world approach. A couple centuries ago, most of the developed world was as least as bad off as the Third World is now. What changed is that they built the infrastructure which allowed all that. It might not be as cheap and easy as you'd like, but it is cheap and easy enough.
- Investors are warned against using market orders and stops because HFT can and will suddenly withdraw their quotes. This alone should tell you something is rotten at the core.
Rotten at the core of market orders and stops. The point here is that market orders and stops exhibit unexpected HFT behavior and always have.
- Some universities, such as Georgetown, can no longer afford to buy TAQ market data for their professors or students to analyze. This will lead to less academic oversight, guidance and involvement, as well as students who are less prepared for careers on Wall Street. Data has become prohibitively expensive because of all the excessive quotes generated by HFT.
I guess someone will either have to change their billing structure or lose business.
Quote spreads are much wider and less stable during market open, which causes many micro flash crashes in individual stocks.
Don't see the problem. If you suspend trading for half a day, then you're introducing uncertainty and hence, wider spreads. The solution here is a 24 hour a day 7 days a week market. Then there's no openings to cause such trouble.
- Misleading price quotes interferes with price discovery, one of the core functions of a stock exchange.
No they don't. Look at the price over time rather than instantaneously.
- Mis-allocation of resources, both human and technological.
Misallocation is a subjective opinion. Obviously, the people involved don't believe they are misallocating anything. Given the potential for interesting spinoffs and the advantages to markets such as improved liquidity, I don't see the claim.
- If left unchecked by regulators, traders who want to process quotes, will soon need super-computers, 10 gigabit connections and their own engineering staff to have the same basic level of trading information they needed in 2006.
I don't see the problem here. Change the trading strategy so you no longer need the supercomputer and fancy connections.
- HFT generated so much Quote Spam in the flash crash, that it took 5 months for the SEC to assemble the data.
Don't care.
- During the flash crash, excessive quotes from HFTs overloaded quote data feeds, causing severe delays: stock quotes from some exchanges were behind over 30 seconds during the height of the flash crash.
More don't care.
But I'm sure these are all good things, and help keep the markets healthy. I must just misunderstand how awesome they are.
Some of them are long standing problems of the market or the trading approach and have nothing to do with HFT. Others really aren't problems, much less problems that we should care about.
I agree with the original poster. No one has made a compelling case that HFT has any real net impact on retail investors or anyone making an IPO or issuance. HIgh volume doesn't indicate impact in your example above. Keep in mind that there would be plenty of non-HFT opportunists preying on this moment. Thus, there would be high volume anyway due to the Morgan Stanley price floor.
No impact? Do you really expect us to believe those flash crashes never happened?
Do you expect me to believe that flash crashes have actual impact? If trades in a flash crash can't be rolled back, then the people who lose money in the crash are precisely the ones who caused it. It solves itself.
The Apollo space program. All other space exploration too. The Internet. Transistors, fiber optics, radar (and all the high-frequency electronics that come with it). I could go on
I was hoping for an example here. The Apollo program is a program that landed a dozen people on the Moon as well as a temporary space station, and then completely ended. Aside from a little bit of infrastructure in Florida and Texas and some junk on the Moon, there's no trace of the Apollo program any more.
All other space exploration? I suppose it's been great for the contractors, but I don't see much value coming out for the money.
The Internet. Transistors, fiber optics, radar (and all the high-frequency electronics that come with it).
All examples where private enterprise dominates. Keep in mind that most such government-funded activity in these areas is either graft or paying someone to do something that they'd do anyway.
And what would you have gotten for that money? At least with the wars, the US knocked over a dictatorship and set back some enemies that were looking to make a habit of bombing stuff on US soil.
You also knocked over what conservative estimates place at more than 110 000 innocent civilians in Iraq and 20 000 in Afghanistan. And you can't document those claims.
Why use "documentation" when reasoned argument suffices? Prior to about the mid-2000s, Al Qaeda showed a cyclic pattern of attacks versus the US. Every couple of years, there would be a big, high profile attack against US property in allied territory or on US soil. That hasn't been true for some time.
And it's quite evident that the Iraqi invasion removed Saddam Hussein from power.
I don't gamble. A COD from my bank right now will yield 1.05% on a 36 month note. Maybe you'll come out ahead of me... maybe I'll come out ahead of you.
There's a number of fairly conservative dividend stocks that will trounce your return. The stock market isn't just a place for high risk gamblers. There's a lot of other choices as well.
It's worth noting that it's not. There are certain sorts of orders where one could probe a large order in this way by selling small amounts to the order, but one can't detect execution of a trade without trading.
Well, because the market mechanism doesn't work as well as the public mechanism here
Well, you'll need to give an example then. It looks to me like market works better for this sort of thing.
For the price of the Afghanistan and Iraq wars you could do the Apollo project between 10 and 40 times over, depending on which estimate you trust, never mind the human cost.
And what would you have gotten for that money? At least with the wars, the US knocked over a dictatorship and set back some enemies that were looking to make a habit of bombing stuff on US soil.
Slashdot Mirror
What do you mean no? My statement is quite relevant to the discussion: I'm pointing out the desires of the funding sources aren't always about near future utility. They may very well desire science for the sake of science.
It's a tautology. You need to say such things first. I can only discuss what you actually wrote. As to your elaboration, it's fine if the funding source wishes to fund science for the sake of science. That's just not the case with public funding which is a big part of this issue.
But it's not all crap or scientific activities would be on the scale of bridge clubs or crossword puzzle enthusiasts.
I never said it's all crap. That's not how Sturgeon's Law works. I'm saying you can't help but end up funding a lot of duds. There is no panacea to pin point what research "should" be funded and which shouldn't
The point is that the vast portion of scientific funding happens because of the small part that has value not the huge part that didn't work out.
Irrelevant to your original assertion since he found value in even the less fruitful activities.
It's very relevant. I'm showing how he didn't just magically found value without a lot of trial and error. I'm showing how even the best inventors accept a high rate of failure, and how instead of seeing failure as some bad thing that ought to eliminated in some collectivist controlled system, you just accept it as a learning experience.
No one made the mistake of seeing failure as a bad thing, hence why your observation is irrelevant to the argument. What I'm talking about is rationalizing scientific activities on grounds that can't be and never need be verified before the funding is long gone. That's ideal grounds for committing outright fraud, which is IMHO happening to a lot of the big projects (and many of the little ones) out there.
The problem as I see it, is that when you don't have any grounds for evaluating the near future potential of scientific work, then productive scientists look exactly like ones who won't ever deliver scientific output of note. It's not the possibly high failure rate of the activity, but the inability to distinguish between someone with a high failure rate and a few good successes and someone who will never have successes.
Two things to note here. First, one can't do the above without making trades. Second, HFT just makes the process a little quicker. One could do this probing by hand.
This is a well known problem that comes from deciding to make big, sudden moves (such as selling suddenly a zillion shares of company stock). You're going to move the price and it's going to cost you more. HFT just means that the market makers figure your plan out sooner than they did before.
you can always switch to socialism where the good of the many is valued over the "market".
And yet you still get mugged, just by a larger and more brutal party.
If you don't pay taxes you shouldn't get anything.
When are we going to get the converse? If you don't use the service, you don't have to pay for the service?
This is a well known thing which holds for all headlight bulbs. I doubt it has anything to do with the lifespan of these bulbs.
I don't see us implementing global well designed AI to run government and finances to forcibly stabilize our "plane".
Ok, so you don't see that. So what? We don't run all fighter jets from a central location either.
You are claiming that 70% of volume means HFT is somehow significant. It's not. It's still the same market makers as before, doing the same activities they've done before, taking a similar piece of the action as before, but doing so on a finer time scale.
Science is simply the discovery of knowledge. Nowhere does it require the discovered knowledge to have near future utility, or even productive uses.
No, we're discussing the funding of scientific activities and to some degree, the public funding of such. In that case, the activity in question should reflect the desires of the funding sources.
The way I see it, Sturgeon's law applies to science. So you can't avoid having a great deal of your research money leading to crap, a great deal of research results not being productive,
But it's not all crap or scientific activities would be on the scale of bridge clubs or crossword puzzle enthusiasts.
Even a famous inventor (as in, he's not doing it for SCIENCE, he's looking for ways to use science in a productive manner) once said: I did not fail 10000 times. I succeed in finding 10000 ways which did not work.
Irrelevant to your original assertion since he found value in even the less fruitful activities.
People looked at what Bhor had shown, and what Enstein had shown and said, if we put money into this we can make power, or bombs.
And that "basic research" explained otherwise puzzling real world phenomena. If you're dumping a bunch of money into experimental physics, then a model that better explains the phenomena you're looking at is big leverage.
Without the pure basic research that came before it, we'd have nothing.
Nonsense, we would as we did, explore relevant basic science as part of the overall scheme.
And explode in flight like a rocket, like it did everytime this policy has been applied.
Or every time this policy hasn't been applied. It's almost like it's a completely irrelevant issue to the bottle rocket economy.
I think the problem isn't whether money is spent on basic research, but rather what approach we use for basic research. If we fund basic science because it has near future utility, then we're doing a good approach. The money we spend has some concrete intent to it, and more importantly, we have a metric of how well we're doing and whether the money is spent well.
But if we spend money on SCIENCE without regard to the value of the research, we're going to end up with greatly unproductive efforts. That's what I see current advocacy of basic science as. It's an attempt to evade responsibility and accountability, not an attempt to do more basic science.
The problem facing research and development today is that there is not nearly enough focus on basic research - everything is about immediate, applied applications - which is the highest risk type of research you can do, since the goal is "build a very specific thing".
Clearly a quote from someone working in basic research, So I'm to believe that there's research out there for which you can't come up with an "elevator pitch" of near future benefits? Why fund it then? My view is that if you can't justify your efforts with near future benefits, then it is welfare not research.
One merely needs to look at history to see that every significant development has had near future application. Electricity? Lightning rods. Relativity? Explains much of those funky astronomy and physics observations. Number theory? Codes for encryption, better algorithm development (eg, among the earliest would be how to add, multiply, and divide by hand), and astronomy calculations.
And it doesn't broaden your horizons since you're aiming at specific targets informed by existing theory.
That's never been true in the past. Even very specific research requires novel knowledge and development of technologies to handle the task. For example, there was yet another story on high frequency trading. Research in that area has a very narrow focus - make money by millisecond to microsecond scale trading. But to get there, one needs developments in computer technology, algorithm design (namely, how to quickly make decisions on those time scales and how to generate profitable economic models on those time scales), and some game theory and stochastic calculus.
So does any other research that pushes the envelop. If it was straightforward to do something, then it probably wouldn't need to be researched.
So that is two of the hidden truths of this whole debate. Valuable science has always had near future application and a lot of "immediate, applied applications" is basic science.
We could do those five things now, if our political elites possessed enlightened self-interest.
It's not my political elites that are screwing these particular things up. That's somebody else's job.
HFT will continue to destabilize the stock market.
So what? It's worth noting here that inherent instability is not necessarily a bad thing for a system. For example, modern fighter jets are inherently unstable and use sophisticated control systems to keep in the air. When you have a system that you want to respond quickly to new information, such as a stock market, then instability is an advantage.
Suggesting that 70% of all trades have no impact on a market takes a very special kind of person.
It's these illogical statements that bring me to post time and time again. Volume of trades doesn't imply anything of significance is going on. Nor do so-called "flash crashes". DarkOx's post remains relevant.
I merely pointed out that those problems have already been solved. No need to invade anyone or other illogical gibberish. Sure, it'd be nice if those things were a bit cheaper and easier, since they could be implemented with less infrastructure and sooner which would save and improve many lives.
It's worth noting that in the overall mission they generally get by with one or two 9's of reliability. There's no 100% reliability out there and nobody would be able to afford it, if there was.
1. Cheap and easy ways to clean water for the world
2. Cheap and easy ways to provide light for the world
3. Cheap and easy ways to feed the world
4. Cheap and easy ways to maintain sanitation
5. Cheap and easy ways to provide education to the world.
All solved problems. Just use the developed world approach. A couple centuries ago, most of the developed world was as least as bad off as the Third World is now. What changed is that they built the infrastructure which allowed all that. It might not be as cheap and easy as you'd like, but it is cheap and easy enough.
- Investors are warned against using market orders and stops because HFT can and will suddenly withdraw their quotes. This alone should tell you something is rotten at the core.
Rotten at the core of market orders and stops. The point here is that market orders and stops exhibit unexpected HFT behavior and always have.
- Some universities, such as Georgetown, can no longer afford to buy TAQ market data for their professors or students to analyze. This will lead to less academic oversight, guidance and involvement, as well as students who are less prepared for careers on Wall Street. Data has become prohibitively expensive because of all the excessive quotes generated by HFT.
I guess someone will either have to change their billing structure or lose business.
Quote spreads are much wider and less stable during market open, which causes many micro flash crashes in individual stocks.
Don't see the problem. If you suspend trading for half a day, then you're introducing uncertainty and hence, wider spreads. The solution here is a 24 hour a day 7 days a week market. Then there's no openings to cause such trouble.
- Misleading price quotes interferes with price discovery, one of the core functions of a stock exchange.
No they don't. Look at the price over time rather than instantaneously.
- Mis-allocation of resources, both human and technological.
Misallocation is a subjective opinion. Obviously, the people involved don't believe they are misallocating anything. Given the potential for interesting spinoffs and the advantages to markets such as improved liquidity, I don't see the claim.
- If left unchecked by regulators, traders who want to process quotes, will soon need super-computers, 10 gigabit connections and their own engineering staff to have the same basic level of trading information they needed in 2006.
I don't see the problem here. Change the trading strategy so you no longer need the supercomputer and fancy connections.
- HFT generated so much Quote Spam in the flash crash, that it took 5 months for the SEC to assemble the data.
Don't care.
- During the flash crash, excessive quotes from HFTs overloaded quote data feeds, causing severe delays: stock quotes from some exchanges were behind over 30 seconds during the height of the flash crash.
More don't care.
But I'm sure these are all good things, and help keep the markets healthy. I must just misunderstand how awesome they are.
Some of them are long standing problems of the market or the trading approach and have nothing to do with HFT. Others really aren't problems, much less problems that we should care about.
I agree with the original poster. No one has made a compelling case that HFT has any real net impact on retail investors or anyone making an IPO or issuance. HIgh volume doesn't indicate impact in your example above. Keep in mind that there would be plenty of non-HFT opportunists preying on this moment. Thus, there would be high volume anyway due to the Morgan Stanley price floor.
No impact? Do you really expect us to believe those flash crashes never happened?
Do you expect me to believe that flash crashes have actual impact? If trades in a flash crash can't be rolled back, then the people who lose money in the crash are precisely the ones who caused it. It solves itself.
The Apollo space program. All other space exploration too. The Internet. Transistors, fiber optics, radar (and all the high-frequency electronics that come with it). I could go on
I was hoping for an example here. The Apollo program is a program that landed a dozen people on the Moon as well as a temporary space station, and then completely ended. Aside from a little bit of infrastructure in Florida and Texas and some junk on the Moon, there's no trace of the Apollo program any more.
All other space exploration? I suppose it's been great for the contractors, but I don't see much value coming out for the money.
The Internet. Transistors, fiber optics, radar (and all the high-frequency electronics that come with it).
All examples where private enterprise dominates. Keep in mind that most such government-funded activity in these areas is either graft or paying someone to do something that they'd do anyway.
And what would you have gotten for that money? At least with the wars, the US knocked over a dictatorship and set back some enemies that were looking to make a habit of bombing stuff on US soil.
You also knocked over what conservative estimates place at more than 110 000 innocent civilians in Iraq and 20 000 in Afghanistan. And you can't document those claims.
Why use "documentation" when reasoned argument suffices? Prior to about the mid-2000s, Al Qaeda showed a cyclic pattern of attacks versus the US. Every couple of years, there would be a big, high profile attack against US property in allied territory or on US soil. That hasn't been true for some time.
And it's quite evident that the Iraqi invasion removed Saddam Hussein from power.
I don't gamble. A COD from my bank right now will yield 1.05% on a 36 month note. Maybe you'll come out ahead of me... maybe I'll come out ahead of you.
There's a number of fairly conservative dividend stocks that will trounce your return. The stock market isn't just a place for high risk gamblers. There's a lot of other choices as well.
How is this even possible?
It's worth noting that it's not. There are certain sorts of orders where one could probe a large order in this way by selling small amounts to the order, but one can't detect execution of a trade without trading.
Well, because the market mechanism doesn't work as well as the public mechanism here
Well, you'll need to give an example then. It looks to me like market works better for this sort of thing.
For the price of the Afghanistan and Iraq wars you could do the Apollo project between 10 and 40 times over, depending on which estimate you trust, never mind the human cost.
And what would you have gotten for that money? At least with the wars, the US knocked over a dictatorship and set back some enemies that were looking to make a habit of bombing stuff on US soil.