Radio Engineer Files Objection to WIPE • Hacker News Board

Re: Radio Engineer Files Objection to WIPE

#41

Post by alexpil » Fri, Sep 11, 2020, 6:27 PM UTC

bluGill wrote: post #10

blutack wrote: post #8

Earlier quoted context omitted.

These links are often used for executing strategies or sending information between different exchanges (a classic example being the cross-exchange arbitrage).

To put it more concrete, there are a number of very large companies that have their stock traded in many locations. Japan, London, and New York all have big stock exchanges (that is just what I know of without looking - if you told me those were the only 3 cities with global stock markets I'd call you a lier). If you see a big company in London trading for slightly less than the same company in New York then you shou…

Not necessarily stonks, it can also be commodities (oil/etc), or currencies, or anything else.

Latency arbitrage is old. Paul Julius Reuter (as in, Reuters) made his first fortune by using carrier pigeons to transmit trade data from Brussels to Aachen. Then he started a new agency and built telegraph lines.

Rice traders in Japan used boats/smoke-signals/runners to transmit information between rice markets in 1700s

https://digital.sandiego.edu/cgi/viewcontent.cgi?article=111... pages 15-22 has more examples.

Re: Radio Engineer Files Objection to WIPE

#42

Post by ISL » Fri, Sep 11, 2020, 6:32 PM UTC

maxbond wrote: post #33

ISL wrote: post #28

Earlier quoted context omitted.

Man, it'll be hard to be a grocery store, or any other intermediary, under that regime. Such a rule would slaughter credit-card processors, too. Anyone who makes a market or facilitates a transaction would have a problem. To expand a bit -- an antidote to HFT front-running is the limit order. If you can buy the thing you want at a price you believe is acceptable, HFT front-runners simply get paid for providing you li…

How are any of those operations effected by capital gains? They aren't talking about moving money around, they're talking about selling stock that has appreciated in price. With regards to frontrunning, the problem isn't that XYZ is trading at $5 and I get charged $5.05 because I put in a market order - or at least, the problI don't think you fully understand frontrunning either.em isn't _just_ that. The problem is t…

I have occasionally let limit orders stand for weeks or more (keeping tabs on the news/fundamentals of the company, of course), knowing that I would be happy to buy/sell the share at the limit price.

On some occasions, I've bought shares, using a limit order, at $0.95 and immediately posted the limit sell order at $1.05. Throughout, I believed that the company was worth more than $1.05, but set the limit at a price that provided a margin of safety. If someone else agreed, but was willing to pay $1.05 or more for the shares, I was happy to oblige.

When the limit order hit a few weeks later, I took my 10.5% return and went home happy (to place another limit buy order at $0.95). One need not consume all of the value on the table. It is important to leave value for your counterparties, too.

Re: Radio Engineer Files Objection to WIPE

#43

Post by maxbond » Fri, Sep 11, 2020, 6:37 PM UTC

ISL wrote: post #42

maxbond wrote: post #33

Earlier quoted context omitted.

How are any of those operations effected by capital gains? They aren't talking about moving money around, they're talking about selling stock that has appreciated in price. With regards to frontrunning, the problem isn't that XYZ is trading at $5 and I get charged $5.05 because I put in a market order - or at least, the problI don't think you fully understand frontrunning either.em isn't _just_ that. The problem is t…

I have occasionally let limit orders stand for weeks or more (keeping tabs on the news/fundamentals of the company, of course), knowing that I would be happy to buy/sell the share at the limit price. On some occasions, I've bought shares, using a limit order, at $0.95 and immediately posted the limit sell order at $1.05. Throughout, I believed that the company was worth more than $1.05, but set the limit at a price t…

I wish all the best for my counterparties who provide me liquidity. I congratulate you on your returns.

Parasitic parties who skim transactions without providing liquidity are just sucking money from pension funds to transfer to the very wealthy. They're pickpockets.

Edited to add:

When you executed the trade you described, you did so speculatively - you were in the market with the rest of us, you were taking a risk, and when someone wanted to get into the market you were there to sell to them.

That's completely different from holding a position for microseconds when you know for a fact someone is on their way.

Re: Radio Engineer Files Objection to WIPE

#44

Post by ISL » Fri, Sep 11, 2020, 9:01 PM UTC

maxbond wrote: post #43

ISL wrote: post #42

Earlier quoted context omitted.

I have occasionally let limit orders stand for weeks or more (keeping tabs on the news/fundamentals of the company, of course), knowing that I would be happy to buy/sell the share at the limit price. On some occasions, I've bought shares, using a limit order, at $0.95 and immediately posted the limit sell order at $1.05. Throughout, I believed that the company was worth more than $1.05, but set the limit at a price t…

I wish all the best for my counterparties who provide me liquidity. I congratulate you on your returns. Parasitic parties who skim transactions without providing liquidity are just sucking money from pension funds to transfer to the very wealthy. They're pickpockets. Edited to add: When you executed the trade you described, you did so speculatively - you were in the market with the rest of us, you were taking a risk,…

True -- agreed that a pure front-run that provides no liquidity would appear to have negligible value aside from generating heat.

In devil's advocate-mode: The HFT trader is still providing liquidity for that person on the way. If someone else were to purchase the shares ahead of the inbound trade, the inbound buyer might not be able to acquire those shares. If the inbound trade were a limit order, rather than a market order, then the HFT trader might not have room to profit.

Re: Radio Engineer Files Objection to WIPE

#45

Post by bluGill » Sat, Sep 12, 2020, 12:38 PM UTC

bradknowles wrote: post #16

bluGill wrote: post #10

Earlier quoted context omitted.

To put it more concrete, there are a number of very large companies that have their stock traded in many locations. Japan, London, and New York all have big stock exchanges (that is just what I know of without looking - if you told me those were the only 3 cities with global stock markets I'd call you a lier). If you see a big company in London trading for slightly less than the same company in New York then you shou…

This is called “arbitrage”. It takes millions and billions of dollars to play this game. Keep in mind that the majority of back-end clearing and settlement of trades in Europe is done by Euroclear [0], who reported over 27 Trillion Euros of assets under management in 2015. In the US, virtually all back-end clearing and settlement is handled by DTCC [1], who reported handling over 1.7 Quadrillion dollars worth of valu…

True, to make money you need a ton. Sometimes you will make bad trades. Even when it works out your gross profit on the 10000 trade is 100, out of which you need to pay expenses. It isn't a place for small players, but the amount of money on an individual trade isn't much.