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Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

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Re: Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

#41

Post by scotch_drinker »

steve8918 wrote: post #31
javert wrote: post #21

Earlier quoted context omitted.

If I recall correctly, wasn't there, like, an extremely fast recovery from the flash crash? Why does the flash crash even matter? (I'm not being snarky at all, BTW.)

A lot of people lost a lot of money during the flash crash, through margin calls, stop loss hits, etc. It also called into question the stability of our markets. If people lose confidence in our stock markets, then people stop trading on them. If we have another flash crash, you can bet that the already-low volumes on the markets will be met with even lower volumes, which could damage our economic recovery. Most peop…

This is something people miss entirely in this argument, the fact that lots of investors have trailing stop trades in and in a flash crash, those people get their asses handed to them. Then we immediately start having a credibility problem. Once you have a credibility problem, the end game is getting close. When you combine that with things like the MF Global bankruptcy where client accounts were stolen from, you start to think maybe the game is rigged. Or at least I do.

Re: Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

#42

Post by scotch_drinker »

javert wrote: post #37
steve8918 wrote: post #31

Earlier quoted context omitted.

A lot of people lost a lot of money during the flash crash, through margin calls, stop loss hits, etc. It also called into question the stability of our markets. If people lose confidence in our stock markets, then people stop trading on them. If we have another flash crash, you can bet that the already-low volumes on the markets will be met with even lower volumes, which could damage our economic recovery. Most peop…

A lot of people lost a lot of money during the flash crash, through margin calls, stop loss hits, etc. Well, if day traders lost money, who cares? That's the business they're in. It also called into question the stability of our markets. If people lose confidence in our stock markets, then people stop trading on them. True, but there was a fast recovery, and people are still trading. You mentioned that volume is low.…

It's not the day trader losses we're worried about. It's the average investor who had trailing loss orders in on P&G (just an example) who had to sell their positions at steep losses only to see the market rebound immediately leaving them with zilch. This attitude of "If day traders lost money, who cares" is missing the forest for the trees. Lots and lots of people got screwed by the flash crash and that starts to cause credibility issues.

Re: Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

#43

Post by yaix »

HFT is just another area where everybody knows that it is broken, it does not serve any useful purpose for society, and everybody knows that eventually it will lead to a huge crash. And nobody does anything, because there is just too much quick money to be made. Humans...

Re: Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

#44

Post by joe_the_user »

ezl wrote: post #2

sigh i got really excited about this because I was considering the interpretation of the word "hackers" like we use it in "Hacker News" (relevant: http://paulgraham.com/gba.html ) I know that the startup community at large doesn't largely respect short term trading, particularly HFT. I understand it, though I honestly think its misguided and the outrage is disproportionately large, but thats another story. The reason…

Oddly enough, I was originally expecting that same thing.

Still, I think it's reasonable to ask the question: where does the boundary between good, useful hacking and evil, insidious hacking lie? And I think it's reasonable to not assume that the boundary lies at what is legal or that the boundary lies at what is "interesting".

I mean, how you produce and profit from spam is a hard, interesting problem. Flame and Stuxnet might, in some courts, be legal. In fact, a lot of "Black hats" satisfy many if not all of your list items.

The argument that HFT is working with a nearly zero-sum situation needs to be addressed. A "normal" startup is usually trying to create "new usefulness". Where do "props" fit in to this question?

Re: Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

#45

Post by clarky07 »

ezl wrote: post #34
kristianp wrote: post #5

I for one don't agree with HFT. Why should our best hackers and mathematical minds be wasted on something so shallow as gaming the market? Would a small randomised delay introduced by the exchange into each stock trade (or price datum) reduce the incentive for HFT?

I forget where I read this, but in an article by someone else I read something like: "[There's something very sinister about a company that takes society's greatest engineer and science minds away from important tasks for humanity and diverts them to the task of optimizing ads] A lot of people will say what you say about HFT, but have no qualms about Google and Facebook and Twitter. Why is that?

I for one would say this about HFT, Facebook, twitter, and google. Though to a lesser extent for google as they have lots of other impressive projects such as self driving cars that could have a good impact.

Re: Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

#46

Post by yaix »

AznHisoka wrote: post #26
ezl wrote: post #2

sigh i got really excited about this because I was considering the interpretation of the word "hackers" like we use it in "Hacker News" (relevant: http://paulgraham.com/gba.html ) I know that the startup community at large doesn't largely respect short term trading, particularly HFT. I understand it, though I honestly think its misguided and the outrage is disproportionately large, but thats another story. The reason…

I find HFT is a lot similar to SEO, and the perception is similar as well. People just don't like either because they feel it's not bringing any extra value to society, and it's all about gaming something for your own personal wealth. But most people aren't looking out for your personal interest anyway, so you should ignore them.

I disagree. SEO serves a purpose. It makes web sites more accessible to users, by correctly using HTML (title, h1, alt="", etc.) and it makes the web more machine readable and thus easier to find useful things. But I guess you mainly refer to the spammer SEOs that try to trick Google.

HTF otoh does not serve any purpose whatsoever. On the contrary, it brings instability into the market and makes the market less useful. But my guess it that it will need a major market crash before HFT gets banned.

Re: Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

#47

Post by joe_the_user »

AznHisoka wrote: post #26
ezl wrote: post #2

sigh i got really excited about this because I was considering the interpretation of the word "hackers" like we use it in "Hacker News" (relevant: http://paulgraham.com/gba.html ) I know that the startup community at large doesn't largely respect short term trading, particularly HFT. I understand it, though I honestly think its misguided and the outrage is disproportionately large, but thats another story. The reason…

I find HFT is a lot similar to SEO, and the perception is similar as well. People just don't like either because they feel it's not bringing any extra value to society, and it's all about gaming something for your own personal wealth. But most people aren't looking out for your personal interest anyway, so you should ignore them.

The thing is that "good" SEO isn't gaming the system but rather working to make sure that your site is a "notable authority" in whatever niche you're targeting. If the article is the counter-argument, what is the argument that HFT provides some similar kind of usefulness.

Re: Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

#48

Post by steve8918 »

scotch_drinker wrote: post #41
steve8918 wrote: post #31

Earlier quoted context omitted.

A lot of people lost a lot of money during the flash crash, through margin calls, stop loss hits, etc. It also called into question the stability of our markets. If people lose confidence in our stock markets, then people stop trading on them. If we have another flash crash, you can bet that the already-low volumes on the markets will be met with even lower volumes, which could damage our economic recovery. Most peop…

This is something people miss entirely in this argument, the fact that lots of investors have trailing stop trades in and in a flash crash, those people get their asses handed to them. Then we immediately start having a credibility problem. Once you have a credibility problem, the end game is getting close. When you combine that with things like the MF Global bankruptcy where client accounts were stolen from, you sta…

Exactly. $1.6 billion lost from customer accounts that were not supposed to be touched, and no one is arrested? It just evaporated into thin air? The entire thing is disgusting, and I pulled out most of my money from my futures trading account exactly because of this, because I didn't have confidence that I would see my money again. Hedging through futures is something that many commodities producers do in order to have predictable revenues, and they just lost their shirts because of criminal fraud, and nothing is going to be done.

Re: Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

#49

Post by spamizbad »

kristianp wrote: post #5

I for one don't agree with HFT. Why should our best hackers and mathematical minds be wasted on something so shallow as gaming the market? Would a small randomised delay introduced by the exchange into each stock trade (or price datum) reduce the incentive for HFT?

> Why should our best hackers and mathematical minds be wasted on something so shallow as gaming the market?

The reason why these shops can employ the "best hackers and mathematical minds" is because they're willing to pay for them.

Everyone wants to hire 10-to-1s but nobody wants to pay them even 1.5x the salary of a blub hack. These days people say "We pay market rate!" and wear it like a badge of honor.

Re: Mark Cuban: High-Frequency Traders Are the Ultimate Hackers

#50

Post by cynicalkane »

joe_the_user wrote: post #44
ezl wrote: post #2

sigh i got really excited about this because I was considering the interpretation of the word "hackers" like we use it in "Hacker News" (relevant: http://paulgraham.com/gba.html ) I know that the startup community at large doesn't largely respect short term trading, particularly HFT. I understand it, though I honestly think its misguided and the outrage is disproportionately large, but thats another story. The reason…

Oddly enough, I was originally expecting that same thing. Still, I think it's reasonable to ask the question: where does the boundary between good, useful hacking and evil, insidious hacking lie? And I think it's reasonable to not assume that the boundary lies at what is legal or that the boundary lies at what is "interesting". I mean, how you produce and profit from spam is a hard, interesting problem. Flame and Stu…

Trading is a zero-sum game, but investing is not, and trading exists to make markets and snipe inefficiencies. The amount of money that can be made here can be surprising, until you consider that they're oiling the gears for manifold trillions of dollars in commerce and wealth. Some of that is gambling, but most of it isn't. Stuff like institutional hedgers and investment funds are huge sources of market activity.
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