NYT Op-Ed: Could High-Speed Trading Lead To Another Panic?

New York Times:

The idea is straightforward: Computers take information -- primarily "real-time" share prices -- and try to predict the next twitch in the stock market. Using an algorithmic formula, the computers can buy and sell stocks within fractions of seconds, with the bank or fund making a tiny profit on the blip of price change of each share.

There's nothing new in using all publicly available information to help you trade; what's novel is the quantity of data available, the lightning speed at which it is analyzed and the short time that positions are held.

Read the whole story: New York Times

Comments

[fed U]

just like in the last bull market and econ recovery, main street gets left in the cold while wall street prospers...
hat tip to... http://www.iamned.com

[dadw5boys]

Want the dollar to have a higher value ?

Support the control of Executive Salarys.

Over paying executives only serves to lower the value of the dollar for eveyone else. The over paid executives tend to over pay for services they want and that leads to people demanding higher payment for services from everyone else.

These Executives make so much income too easy and they soon lose respect the dollar and the hard work others must endure to make even 1/2 that amount. Increaseing the pay of an executive who will spend it to buy a yatch might improve the economy in Sweden and their shipyards for a year but it only harms Americans in the long run.

[dadw5boys]

Traders can fight back against these high speed machine by palceing limit orders to buy or sell orders and then canceling the orders before they are filled. Their high speed equpiment picks up your order but not the cancelations.
Use the technology against them just like they are using it against you.

Of course you have to own the stocks to do this first.

If you want to buy more of a stock at a lower prices just place a lot of small limited sell orders and then cancel them. The amount of stock to be sold does not matter it is the number of sell or buy orders that matters. That is their weak point. Adding in the number of shares would slow them down in making decisions.

[Chip W]

It used to be that money was about buying a loaf of bread.

[Lahonda]

So, these commissions are paid for what marketing or sales effort?

Do these two disparate situations coincide or do they have two super efficient methods for generating revenue in a down market?

Imagine if one were to turn this on the short side of the situation?

Up, down, all around... just a "sliver".

[jalowe1957]

If another panic manifests itself, do we have enough Xanax stockpiled to get us through it?

[Lahonda]

Gotta love it... medicated America, buzzin' through the recession.

[Lahonda]

This is no different than far east sweat shops set up to build credit in "Linden Dollars" or "WoW weapons".

The recipient of the benefit did nothing to advance the capital position of the companies being traded and in fact, does not care if the company lives or dies.

With virtual money in play, all the hard-earned money looks so drab and dated to these new-age virtual entrepreneurs.

[totaldisbelief]

I wonder if they have a System to win at Roulette too?

[dsws]

Even electronic sheep get fleeced.

[blueken]

Is everyone going to ignore what these Wall Street genuises did to our economy? If you are raising money for a company to expand it's buisness and hire more people, you are doing a good thing. If all you are doing is buying and selling for no other purpose than to skim, you are a parisitic blood sucker. End of Story.

[Lahonda]

Amen to that!

[grateful4thedead]

check out zerohedge dot com for a lot more info on this matter.

[Tazru]

Just take a math class, we should be teaching this stuff in our schools.

BBC had a special: High Anxieties - The Mathematics of Chaos (14 October 2008)

[edva]

Just like "capitalism", the pyramid scheme that is the stock market has "evolved" to the point of self-destruction.

[fed U]

will it lead to another panic? yes, and hopefully soon.

good articles http://www.iamned.com

[Tazru]

This was a BBC program about this issue from last October:

High Anxieties - The Mathematics of Chaos (14 October 2008)

It is not available on the BBC site any more, but it is on Pirate Bay:

http://thepiratebay.org/torrent/4728237/BBC__High_Anxieties_-_The_Mathematics_Of_Chaos

Other copies may also be available.

[Ping]

It is already illegal for a broker to "churn" stock.

[Tazru]

The SEC is not properly funded to handle doing it's job, thanks to the Ayn Randers.

[desertman]

Ayn Randers have nothing to do with it. It is creative traders looking to make a buck. Most of these guys probably never heard of her.