111–120 of 238 posts
More generally, consumers have been fleeced and left out to dry over the past 10 year economic cycle. Take a look at a graph of the S&P500 from 2009-2017, then look at consumer interest rates of 0.5% (in a 'high yield' savings or CD account). It simply makes no sense. We simply cannot build wealth any longer. Baby boomers had CD rates of >10% [0]. Think about that for a moment. [0] http://www.forecast-chart.com/rate-…
Earlier quoted context omitted.
Why is it challenging? What conceivable valuable function does front-running serve?
High frequency trading is not front running. It's becoming truly kafkaesque how often this claim comes up on Hacker News.
Earlier quoted context omitted.
In what way is he incentivized? What advantage does he get from waiting till the last possible moment? He has no clue what the current bids are, so whether he bids at the start or the end he still has exactly as much information. He'll have more information after the bidding closes and the winner is announced of course, but by then it's too late, only thing he can do then is participate in the next round of bidding,…
There are lots of other forms of information in the world other than the orders in a closed auction. Serious question: Why do people always forget this? This comes up ALL THE TIME when people talk about quantized auction times.
Earlier quoted context omitted.
Of course it does. A trader (not an investor) is incentivized to wait to the last possible moment when he can still expect a fill. This is why exchanges disseminate auction imbalance information, to attract people to the auction prior to its completion.
In what way is he incentivized? What advantage does he get from waiting till the last possible moment? He has no clue what the current bids are, so whether he bids at the start or the end he still has exactly as much information. He'll have more information after the bidding closes and the winner is announced of course, but by then it's too late, only thing he can do then is participate in the next round of bidding,…
He gets more advantage from outside information sources.
You are correct that you cannot gain info from the bids that are happening on THAT market, but you can instead get bid/price info on OTHER markets/auctions.
I think this is well known. The real problem is that the traders are much smarter than the regulators, and their ability to obscure far exceeds the regulators' ability to untangle. Incentivise your regulators better and you might end up attracting some real talent who can unearth the tricks the crafty traders pull every day (I am an ex trader, from a bulge bracket IB, and trust me, what some of these guys do is not a…
Or we can just ban anything insufficiently transparent and be done with it. After all, the point of a market transaction for pricing is its ability to convey transparent, accurate information to other market participants -- right?
How's that working out for us?
EDIT: Meta, I will never tire of hearing people be all, "But markets!" as if they aren't just as corruptible as any other human institution — if not more so.
Earlier quoted context omitted.
Also, there is an argument for more time controlled auctions rather than giving everyone a continuous look at the order book. Much like the start of day auction, you could have something similar every minute, where traders submit prices but matching only occurs at the end of each minute. This would certainly put an end to the annoying high/low ticking that happens all too often.
There is no good argument for this. The problems you think it might solve...it doesn't solve. Hint: if the minute long auction closes at precisely the minute boundary at what time do you want to put your orders in?
Earlier quoted context omitted.
Source is I work in the industry. Look at the price of VirtuFinancial stock, who was at one time a premier HFT firm. The amount of disinformation surrounding HFT is staggering.
Unrelated, but I have a question for you. I've been unable to find a good answer for how exactly HFT benefits the average person. Stuff like antibiotics, electric lights, refrigeration, washing machines, phones, computers all have all led to direct and immediate quality of life improvements. Often on the order of a tenfold improvement for that activity, and they are easily within reach of the majority of the populati…
Earlier quoted context omitted.
Unrelated, but I have a question for you. I've been unable to find a good answer for how exactly HFT benefits the average person. Stuff like antibiotics, electric lights, refrigeration, washing machines, phones, computers all have all led to direct and immediate quality of life improvements. Often on the order of a tenfold improvement for that activity, and they are easily within reach of the majority of the populati…
Right now the newest investment strategies are taking alternative data sets, like mining website data, and using it to predict stock prices. What value does that provide to the average guy? Nothing but market efficiency. It's just how the industry works.
Earlier quoted context omitted.
There are lots of other forms of information in the world other than the orders in a closed auction. Serious question: Why do people always forget this? This comes up ALL THE TIME when people talk about quantized auction times.
Your definition of a quantised auction is a bit different to mine. In my definition, you submit at the start and get an outcome at the end. You have no ability to modify the contents of the auction during the auction itself. I feel what you're describing is still a continuous auction... I mean if you can continually modify your order, or indeed submit at different times, at which point in time do you do your matching…
Earlier quoted context omitted.
I think that's about half right. A 0.5% tax on all equities trades, which is what Bernie was proposing, would put a bunch of HFTs out of business basically overnight and at the same time dramatically increase costs for investors via 1) the tax (obviously) 2) wider spreads 3) reduced liquidity.
4) increased volatility 5) less efficient price discovery The HFT shops put millions of dollars into research to attempt to ascertain correct prices (e.g. ETF pricing, derivatives pricing, etc). If they are disincentivized from trading in the equities markets, they will no longer be a conduit of relevant pricing information from other global markets into the equities markets. That means investors (big Wall Street fir…
Am I missing something here?