The Senate conferees negotiating a final Wall Street reform bill approved a measure late Tuesday that purports to protect retail investors yet actually scraps an...
High Fr traders see situations like these as opportunities. A trader will bid higher than the investors - say at $37.10 and offer lower maybe at $37.90. Because his bid/offer are the best in this market, any buyer will buy from the trader at $37.90 (not at $38) and sell to the trader at $37.10 (not $37). If the trader is lucky enough to have his bid hit and his offer taken simultaneously, he will make $.80 per share. The next Hi-F trader will want to jump in front of the first trader, and will improve the market further - he will bid $37.20 and offer $37.80, hoping to make just $.60, if his bid is hit and offer taken. Another trader will come and improve the market further until the spread between the highest bid and the lowest offer becomes just pennies. The spread in BP right now is $37.61-$37.62, thanks to Hi-F traders. If you were a investor interested in buying BP to hold it long term, would you rather buy it at $38 or $37.62 ? Or if you already are a BP shareholder looking to sell your BP holdings, would you rather sell at $37.61 or $37 ? It is the presence of investors, swing traders, scalpers, high frequency traders in the markets - each with different time horizons, that provide buyers and sellers at each price level and together the market liquid and fair.
Ivo_Mutaftchiev: High Fr traders see situations like these as opportunities. A
The article is incorrect on many levels and shows the author's lack of understanding of how high-frequency traders really trade and make money. Yes, traders profit from volatility but they do not cause it, they profit from it and by doing so they limit it.
Volatility is caused by increased risk and uncertainty. Right now there is heightened uncertainty due to the sovereign debt crisis in Europe, the Oil Spill in the Gulf, and others. The market is very sensitive to news - and investors and long-term traders are staying on the side lines. For example news that BP has finally closed the leak can lead to a major spike in BP's price, and reversely, news that the White House will impose a specific monetary fine on BP will cause the stock price to drop even lower. The market is well aware of that, and investors are wary of buying BP unless the price becomes too cheapfor no reason, or wary of selling it unless it is too expensive for no reason. So investors will be willing to buy at $37 or sell at $38 (price is currently at $37.60).
Ivo_Mutaftchiev: The article is incorrect on many levels and shows the
What you see here is a stock market that is no longer reflective of the future business market.
You have very overvalued 20th century companies that have little hope of monopolizing the future, with valuations that cannot be justified based on projected growth.
You have very attractive small and midcap companies that aren't getting the attention they need. And a nano-level business community of 21st century ideas and technologies that can't be bought into by investors.
The best bet is to dump the Big Boys and head for the exits, or reallocate money into the small and midcaps over as broad an area as you can.
jabailo: What you see here is a stock market that is
I once introduced the insight that cells within the body that no longer realize their connection to the body and therefore hog resources and perform no function becoming a threat to the whole body are soon destroyed by the immune system and these cells are called cancer. I think the probability, at least today, is that not enough of the cells are going to wake up and realize their connection, or listen to the brain, so the old body will die after giving birth to a new healthy offspring. The other thing is there is this one that figured out they could exploit the flaws in the system along with the greed to destroy it which brings change much faster then would have ever have happened if left to the "Status Quo" and world's current management and academics. One component in the exercise is called the memetic quantum effect. http://memes.me/memetic_quantum_effect.htm
Richard_Gerber: I once introduced the insight that cells within the body
That was explained well, a good article, reflecting many of the points and articulations I have made in the dialog. I also presented the solution 4 or 5 years ago. If we don't want to ban it, then we need to somehow enable high taxation on short term gains (gambling), no taxation on dividends (investment). The longer something is held the less it is taxed. It is that simple. But probably because the status quo experts didn't come up with this solution and so many of the players of the game benefit from the gambling it is not being promoted or put in place. Entirely new scientific and holistic concepts and system design regarding economics is on http://CoinAge.me/
Lastly there is the Holy Grail of Sustainable Economic system design which I have figured out, at least that is what I think it is. I have not detailed this aspect yet, and no longer feel the inclined to just give it away to the status quo which would not have the understanding or the proper intentions and motivations to successfully implement it anyway. So it could be complete failure of the current systems and even society is it's destiny for failing to work with someone that is actually capable of achieving the ultimate goals, and has the correct wholesome intentions.
Richard_Gerber: That was explained well, a good article, reflecting many of
the gold standard is the tool of tyrants throughout the ages, it caused the fall of the Roman Empire, and would cause ours as well. Both Rome and British Empires were built on fiat currencies; inexpensive emtals for Rome, and tally sticks for the 700 year growth of England's
binksmom85: the gold standard is the tool of tyrants throughout the
Can we please regulate this crap now? I say we put a 24 hour cap on trades. IOW's once you make your trade, you can't sell your purchase for 24 hours. This is the only way that small time investors will ever be able to trade on parity with machines and institutions.
ThePeoplesKey: Can we please regulate this crap now? I say we
Can this be enforced? Many stocks are traded at various exchanges around the world. What if you bought a stock in New York and seconds (or microseconds) later sold it in Tokyo or Brazil. Are all the exchanges' computers interlinked to catch that? I sort of doubt it.
Used to be the cops drove the fastest cars and had the biggest guns. No longer true, and I suspect the same is true for the casinos called "stock exchanges." I do like the idea of highly taxing profits made from stocks held for brief periods. It may take a while to catch up with them(1), but I think it's easier than trying to stop them in their tracks.
(1) Did we ever figure out who was shorting airline stocks right before the 9/11 attack? I've never believed that could have been done totally anonymously, as governments like to tax income and therefore have many ways of finding out who gets it.
twofish: Can this be enforced? Many stocks are traded at various
you are not intended to be on parity with them, their actions are justly called skimming, and it should be outlawed, just like the other laws that we used to have to prevent the gaming of the system
binksmom85: you are not intended to be on parity with them,
It cannot possibly be a fair and balanced market for trading when on one side, you have the high frequency traders and on the other side, the ordinary stock traders who is a step behind all the way. It makes the limit price meaningless as the trading price is ahead of it every step of the way. You pay more for buying and get less for selling. That is the bottom line. If the regulators do nothing about it, ordinary stock traders would
be out of the market sooner rather than later.
emerywood: It cannot possibly be a fair and balanced market for
Just like with the ongoing oil spill catastrophe we have another industry where technology has far outstripped safety and risk management. We are screwed, methinks. The machines and their "human" drivers march on to victory. It will be apyrrhic victory at best. Worship of money is pure evil.
Tim_Janssen: Just like with the ongoing oil spill catastrophe we have
HFT serves no useful function other than to game the market. Except on the heals of disastrous news, a company's health does not change in milliseconds. Robot trading needs to have a time lag required which would eliminate the potential for abuse of the system and provide a small level of safety for the investor.
carmemirandashat: HFT serves no useful function other than to game the
What can we do to make Wall St. psychologically UNimportant, as in 'your 15 minutes are over, The Government is coming to check out your little roulette wheel, so you better leave now, if you're gonna', because a lot of people basically say that stocks and all that jazz are kind of a casino, but with a slightly better reputation.
You know, what happens if everyone gets all fired up in this trading business again, snorting their coke right off the table in front of their workstations, cellphone rubber-banded to each ear, and they're all right in the middle of it, and suddenly Bob trips over the cord to the server, or the mainboard gets too hot, and opens up a trace, or the little Cambodian Junior Hacker's Association finally gets a lucky shot with their latest worm, and everyone is suddenly left staring at a flashing cursor in the bottom corner of the screen, or something? As far as I'm concerned, that whole business still has a lot of credibility and stability problems, and if they're not going to address all that, then they can all go pack sand etc. I think people look at Wall St. like it's some kind of church or something, and, I just don't know, I'm just not feeling the urge to participate, something rotten in there still.
realitytrumpsbull: What can we do to make Wall St. psychologically UNimportant,
loads rotten in there, and in the congress and WH protecting them; and we are supposed to ignore them while the next bubble gets ready to burst? they're blowing like mad on it right now
binksmom85: loads rotten in there, and in the congress and WH
Budget Minister Francois Baroin indicated on Sunday that France should not take for granted its AAA rating, which allows Paris to borrow relatively cheaply on international markets and finance its big budget deficit.
"The objective of keeping the AAA rating is an objective that is a stretch, and it is an objective that, in fact, partly informs the economic policies we want to have," Baroin said.
lboucher: Reuters: Budget Minister Francois Baroin indicated on Sunday that France
The markets are going to be ugly tonight when the stock exchanges open in Asia. American investors have to worry, because the markets at the NYSE don't open until Tuesday morning at 9:00 AM. Asian and European investors trade Monday. The timing is terrible.
Thomas Chi
thomaschi.com
ThomasChi: The markets are going to be ugly tonight when the
The regulators don't know how to make the money they want in a real market without accepting bribes from K&J Streets. Otherwise they wouldn't be in politics unless it's simply out to further K&J Street's agenda. I'm challenging Romney, he doesn't seem to get the power of the private sector or he thinks that republicans don't.
Sumi_Allen: The regulators don't know how to make the money they
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Volatility is caused by increased risk and uncertaint
You have very overvalued 20th century companies that have little hope of monopolizi
You have very attractive small and midcap companies that aren't getting the attention they need. And a nano-level business community of 21st century ideas and technologi
The best bet is to dump the Big Boys and head for the exits, or reallocate money into the small and midcaps over as broad an area as you can.
Lastly there is the Holy Grail of Sustainabl
Used to be the cops drove the fastest cars and had the biggest guns. No longer true, and I suspect the same is true for the casinos called "stock exchanges.
(1) Did we ever figure out who was shorting airline stocks right before the 9/11 attack? I've never believed that could have been done totally anonymousl
be out of the market sooner rather than later.
You know, what happens if everyone gets all fired up in this trading business again, snorting their coke right off the table in front of their workstatio
Budget Minister Francois Baroin indicated on Sunday that France should not take for granted its AAA rating, which allows Paris to borrow relatively cheaply on internatio
"The objective of keeping the AAA rating is an objective that is a stretch, and it is an objective that, in fact, partly informs the economic policies we want to have," Baroin said.
Thomas Chi
thomaschi.