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Hedge funds use satellite images to beat Wall Street

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Re: Hedge funds use satellite images to beat Wall Street

#191

Post by logifail »

tryptophan wrote: post #181
logifail wrote: post #170

Earlier quoted context omitted.

> This is called front running and is super illegal. Are you sure it's illegal if it's a hedge fund with access to order flow from a third party? "Front running is one of the easiest ways to make money. It's essentially insider trading, except the inside information isn't about corporate activity; the information is about client order flow. In this case, since the index investors are not their clients, it is legal fo…

That article points out that "front running"(which it isn't) by HF may cost .2% a year. Its probably less than that. Bid/ask spreads are often around that percentage. This is just a trading cost. Nothing nefarious is happening here. The spread may go up if a large fund is buying, but this is only natural due to supply and demand. These HFs are just providing liquidity and "charging" a small fee for doing so. If nobod…

> These HFs are just providing liquidity and "charging" a small fee for doing so

HF traders provide liquidity and market-making when it suits them. Doesn't that stop when it doesn't?

Re: Hedge funds use satellite images to beat Wall Street

#192

Post by harimau777 »

lovecg wrote: post #134
bongobongo wrote: post #128

Earlier quoted context omitted.

Gee, I dunno, maybe think about it for a second. What does a 65 year-old lower middle-class retiree with some money stashed in a 401(k) have in common with an ExxonMobil shareholder aside from the need to generate as much profit as possible? Do you really think this makes sense from a public policy perspective, to pit the retirement needs of the old against, e.g., the environmental health of the young? Please spare m…

> Do you really think this makes sense from a public policy perspective, to pit the retirement needs of the old against, e.g., the environmental health of the young? But couldn’t you argue in exactly the same way for disenfranchisement? Do you think retired people should be allowed to vote?

I think that argument actually supports their point.

I believe that everyone has a human right to vote. However, retired people have generally already established themselves; therefore, the changes that government makes, particularly on social issues, has minimal effect on them. Therefore, I think its unfair for the generation who is still establishing themselves not to be held hostage to the previous generation's vision of society.

Re: Hedge funds use satellite images to beat Wall Street

#193

Post by TomMarius »

kami8845 wrote: post #71
paradox1234 wrote: post #30

Honestly, I'm not particularly impressed. There are a lot of other trading edges that could be found for a lot less hassle and money, but I guess that's also the beautiful thing about the market - more ways to skin a cat than anyone can imagine, and it's also not a zero sum game.

> There are a lot of other trading edges that could be found for a lot less hassle What are you thinking about?

:^)

Re: Hedge funds use satellite images to beat Wall Street

#194

Post by tanderson92 »

tryptophan wrote: post #172
tanderson92 wrote: post #166

Earlier quoted context omitted.

Not all front-running is illegal, see this article which discusses a few examples, including quote matching and order anticipation: https://blogs.cfainstitute.org/investor/2013/04/24/what-to-d... Front-running is very common in bond trading.

Quote from your article: >HFT greatly reduces average trading costs for investors They are market-making, which is something else entirely than front-running.

Source? I can quote the author's book on microstructure supporting my position that it is not something else entirely.

Re: Hedge funds use satellite images to beat Wall Street

#195

Post by rcarrigan87 »

tryptophan wrote: post #181
logifail wrote: post #170

Earlier quoted context omitted.

> This is called front running and is super illegal. Are you sure it's illegal if it's a hedge fund with access to order flow from a third party? "Front running is one of the easiest ways to make money. It's essentially insider trading, except the inside information isn't about corporate activity; the information is about client order flow. In this case, since the index investors are not their clients, it is legal fo…

That article points out that "front running"(which it isn't) by HF may cost .2% a year. Its probably less than that. Bid/ask spreads are often around that percentage. This is just a trading cost. Nothing nefarious is happening here. The spread may go up if a large fund is buying, but this is only natural due to supply and demand. These HFs are just providing liquidity and "charging" a small fee for doing so. If nobod…

Arguments for or against HFT aside, the optics around HFT are pretty bad. Hedge funds getting rich investing millions in faster ways to trade isn't going to play well.

Re: Hedge funds use satellite images to beat Wall Street

#198

Post by oh_sigh »

floatrock wrote: post #31
waterside81 wrote: post #14

There's a whole marketplace where companies with so-called "Alternative-data" sell their datasets to quant traders. Satellite imagery of farms, passenger traffic through airports, all sorts of random, seemingly disparate data.

The reason your free weather app asks for your location data isn't for "local weather forecasts". Well, it is, but that's a cost for them. The income comes from keeping that location tracking on all the time and selling which stores and dentists you go to. Someone can link the NYT story from a few months ago when this came to mainstream attention. Hedge funds also fly cesnas over refinery fields to look at the levels…

How is a free weather app supposed to tell you the local weather without knowing your location?

Re: Hedge funds use satellite images to beat Wall Street

#199

Post by tryptophan »

logifail wrote: post #191
tryptophan wrote: post #181

Earlier quoted context omitted.

That article points out that "front running"(which it isn't) by HF may cost .2% a year. Its probably less than that. Bid/ask spreads are often around that percentage. This is just a trading cost. Nothing nefarious is happening here. The spread may go up if a large fund is buying, but this is only natural due to supply and demand. These HFs are just providing liquidity and "charging" a small fee for doing so. If nobod…

> These HFs are just providing liquidity and "charging" a small fee for doing so HF traders provide liquidity and market-making when it suits them. Doesn't that stop when it doesn't?

Yes. But liquidity some of the time is better than liquidity none of the time. It ain't a perfect world.

Re: Hedge funds use satellite images to beat Wall Street

#200

Post by thinkingemote »

oh_sigh wrote: post #198
floatrock wrote: post #31

Earlier quoted context omitted.

The reason your free weather app asks for your location data isn't for "local weather forecasts". Well, it is, but that's a cost for them. The income comes from keeping that location tracking on all the time and selling which stores and dentists you go to. Someone can link the NYT story from a few months ago when this came to mainstream attention. Hedge funds also fly cesnas over refinery fields to look at the levels…

How is a free weather app supposed to tell you the local weather without knowing your location?

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