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The linked article interpretation is really good as a long format, but as a very short format in EE-ish math-ish terms HN readers will likely understand, market

by VLM 11y ago

The linked article interpretation is really good as a long format, but as a very short format in EE-ish math-ish terms HN readers will likely understand, market prices are not fractal and are occasionally very noisy on small scale. They aren't fractal in that they are strongly scale sensitive, and at a small scale over a short enough time period on an unusual day you're basically looking at noise. As per innumerable statistical analysis given enough noise samples all possible values (of price) are eventually, however temporarily, touched. "Lastly, if we’re concerned about protecting individual investors, we need better education and controls around the most dangerous tool in the ETF investor’s toolbox: the market order." Seriously, those things should just be banned from retail investment and retail investment education.

usertaken 11y ago
"Seriously, those things should just be banned from retail investment and retail investment education." The problem is we aren't just talking about ETFs...there were similar effects happening in individual stocks where they were down much, much greater than this ETF. We should just ban stocks for retail investors? What's wrong with people learning about things before they throw money into something they don't understand? Banning this and banning that blindly just makes people more dependent on someone else doing their homework for them. People need to take responsibility for their own actions and read up on stuff before dumping money into something.
- minimax 11y ago
  He meant ban market orders rather than ban ETFs.
  - usertaken 11y ago
    I think you're right but people need to learn before they do stuff....you can't walk around life being dependent on regulations protecting you. I can't even remember the last time I placed a market order.
    - lmm 11y ago
      Most people are thoroughly dependent on regulations - they're what let you e.g. walk into an unknown shop and buy food there and be confident it won't poison you. Sure, it would be best if every retail investor learnt the market before participating - but that doesn't make it bad to take steps to protect those who don't (assuming those steps aren't particularly costly). If you can't remember the last time you placed a market order, surely it would be no big loss to you if they were banned entirely?
      - usertaken 11y ago
        I'm not saying get RID of all regulations but clearly there's a limit to how much regulation....if someone can't be bothered to google "market order vs limit order" then they deserve to get their a handed to them when they decide to panic sell on one of the worst times to sell. They clearly aren't cut out for this if they are panic selling in the first place. I made money during this time partly b/c I took 2 minutes out of my day many, many years ago and learned the difference between a market and a limit order. Literally, 2 minutes! Next thing you're gonna tell me is that if someone sells at a loss (nevermind it being a "panic" or not) they should be compensated by the gains I made from their stupidity.
        usertaken 11y ago
        Let's say a regulation was passed that didn't allow market orders. Retail investors would feel "safer" b/c they think the government is protecting them. They will then be more inclined to not bother researching the companies they own, etc because, well, the government has got their back. Why not dump all our money into stocks if the government is gonna protect us, right? The problem is that there are a million ways to lose money in investing....chief among them is not spending time to do the research on the companies in which you are invested. The best protection is to be well-informed of what is going on. Certainly, we can't know everything (such as how our food was prepared, quality of it, etc) but every investor putting money into stocks should know something as basic as a market order vs a limit order....that is NOT too much to ask.
gnaritas 11y ago
> Seriously, those things should just be banned from retail investment and retail investment education. What? That's absurd, you want to ban "buy/sell now" at the market price? There is no justification for wanting to ban the most basic and most ordinary transaction type.
- mrchicity 11y ago
  Thing is, that's rarely someone's intent. You wouldn't sell all your stocks for a penny if there were no bids in the market. That's why we have things like circuit breakers and price limits.
  - gnaritas 11y ago
    >Thing is, that's rarely someone's intent. I'd argue fill my order "now" is pretty much aways everyone's intent.
    - kasey_junk 11y ago
      It's not though. You and I may understand the complexity that is actually hidden in a market order and what it means for our execution risk but for many many participants it is closer to "hmmmm, goog is at $630.36? I'd take some of that. Market Order sent. I got filled at 630.45? WTF the markets are rigged, HFTs are front running me". So I wouldn't argue for banning market orders, but I'd probably stop using them as the defaults for people. Making people set limit order prices seems like it would encourage more people to understand the market dynamics.
      - gnaritas 11y ago
        Then they'd just complain about partial fills and failed orders and still blame HFT, I don't see that changing the default would solve anything at all.
        kasey_junk 11y ago
monochromatic 11y ago
> As per innumerable statistical analysis given enough noise samples all possible values (of price) are eventually, however temporarily, touched. I don't care how small a timescale you're looking at, the price of GOOG doesn't flit down to 0.01 or up to 1,000,000.00.
- __d 11y ago
  Quotes for GOOG @ 0.01 http://www.nanex.net/aqck2/3912.html http://www.nanex.net/aqck2/3912.html
  - kasey_junk 11y ago
    Did anything trade there? Was it busted?
  - monochromatic 11y ago
    ... with zero volume.

by VLM 11y ago

usertaken 11y ago

"Seriously, those things should just be banned from retail investment and retail investment education." The problem is we aren't just talking about ETFs...there were similar effects happening in individual stocks where they were down much, much greater than this ETF. We should just ban stocks for retail investors? What's wrong with people learning about things before they throw money into something they don't understand? Banning this and banning that blindly just makes people more dependent on someone else doing their homework for them. People need to take responsibility for their own actions and read up on stuff before dumping money into something.

minimax 11y ago
He meant ban market orders rather than ban ETFs.
- usertaken 11y ago
  I think you're right but people need to learn before they do stuff....you can't walk around life being dependent on regulations protecting you. I can't even remember the last time I placed a market order.
  - lmm 11y ago
    Most people are thoroughly dependent on regulations - they're what let you e.g. walk into an unknown shop and buy food there and be confident it won't poison you. Sure, it would be best if every retail investor learnt the market before participating - but that doesn't make it bad to take steps to protect those who don't (assuming those steps aren't particularly costly). If you can't remember the last time you placed a market order, surely it would be no big loss to you if they were banned entirely?
    - usertaken 11y ago
      I'm not saying get RID of all regulations but clearly there's a limit to how much regulation....if someone can't be bothered to google "market order vs limit order" then they deserve to get their a handed to them when they decide to panic sell on one of the worst times to sell. They clearly aren't cut out for this if they are panic selling in the first place. I made money during this time partly b/c I took 2 minutes out of my day many, many years ago and learned the difference between a market and a limit order. Literally, 2 minutes! Next thing you're gonna tell me is that if someone sells at a loss (nevermind it being a "panic" or not) they should be compensated by the gains I made from their stupidity.
      - usertaken 11y ago
        Let's say a regulation was passed that didn't allow market orders. Retail investors would feel "safer" b/c they think the government is protecting them. They will then be more inclined to not bother researching the companies they own, etc because, well, the government has got their back. Why not dump all our money into stocks if the government is gonna protect us, right? The problem is that there are a million ways to lose money in investing....chief among them is not spending time to do the research on the companies in which you are invested. The best protection is to be well-informed of what is going on. Certainly, we can't know everything (such as how our food was prepared, quality of it, etc) but every investor putting money into stocks should know something as basic as a market order vs a limit order....that is NOT too much to ask.

gnaritas 11y ago

> Seriously, those things should just be banned from retail investment and retail investment education. What? That's absurd, you want to ban "buy/sell now" at the market price? There is no justification for wanting to ban the most basic and most ordinary transaction type.

mrchicity 11y ago
Thing is, that's rarely someone's intent. You wouldn't sell all your stocks for a penny if there were no bids in the market. That's why we have things like circuit breakers and price limits.
- gnaritas 11y ago
  >Thing is, that's rarely someone's intent. I'd argue fill my order "now" is pretty much aways everyone's intent.
  - kasey_junk 11y ago
    It's not though. You and I may understand the complexity that is actually hidden in a market order and what it means for our execution risk but for many many participants it is closer to "hmmmm, goog is at $630.36? I'd take some of that. Market Order sent. I got filled at 630.45? WTF the markets are rigged, HFTs are front running me". So I wouldn't argue for banning market orders, but I'd probably stop using them as the defaults for people. Making people set limit order prices seems like it would encourage more people to understand the market dynamics.
    - gnaritas 11y ago
      Then they'd just complain about partial fills and failed orders and still blame HFT, I don't see that changing the default would solve anything at all.
      - kasey_junk 11y ago

monochromatic 11y ago

> As per innumerable statistical analysis given enough noise samples all possible values (of price) are eventually, however temporarily, touched. I don't care how small a timescale you're looking at, the price of GOOG doesn't flit down to 0.01 or up to 1,000,000.00.

__d 11y ago
Quotes for GOOG @ 0.01 http://www.nanex.net/aqck2/3912.html http://www.nanex.net/aqck2/3912.html
- kasey_junk 11y ago
  Did anything trade there? Was it busted?
- monochromatic 11y ago
  ... with zero volume.