6 ms·

Lots of things are illegible to the public. Explain to me all the processes involved in building the smart phone in your pocket. You can't. I can't. Probably no

by harryh 11y ago

Lots of things are illegible to the public. Explain to me all the processes involved in building the smart phone in your pocket. You can't. I can't. Probably no single person in the world can. Who cares?

dopamean 11y ago
I think the illegibility of it is important if it is affecting other people's finances.
- harryh 11y ago
  Nearly every good or service that you purchase is backed by a nearly illegible process of global trade. That doesn't affect your finances?
  - pjc50 11y ago
    Doesn't it? The illegibility of offshore money affecting overall tax take and therefore government spending, services, and jobs? The illegibility of jobs disappearing to ... somewhere? Not knowing if you've bought products that have been manufactured by slave labour or just awful working conditions? It's not clear.
  - crdoconnor 11y ago
    >Nearly every good or service that you purchase is backed by a nearly illegible process of global trade. That doesn't affect your finances? Yes it has, but why would you consider that a good thing? CAFTA and NAFTA have been pretty horrendous for the finances of Americans and TTIP and TPP are likely to be even worse. They can't be killed unless enough people understand them, either.
- lmm 11y ago
  No-one is being made worse-off by HFT except professional market-makers (who are being outcompeted) and perhaps professional buy-side traders (whose secrets leak out faster), both of whose job it is to understand the market. If you're a nonprofessional you should be investing with Vanguard or the like, and you benefit from HFT. If a layman with no expertise tries day-trading they're going to lose their money either way; we do have "must have this much money to be allowed to trade" laws, but those are controversial too for obvious reasons.
crdoconnor 11y ago
There's a pretty strong chance that your retirement funds are not being cannibalized by Samsung or Apple. Whereas, with HFT...
- joosters 11y ago
  Even if we all accept that HFTs are 'stealing' fractions of a penny per trade, just how often do you trade your retirement funds?
  - djyaz1200 11y ago
    Much more often than you might think. Every time we make a deposit (likely monthly/bi/weekly) that money needs to be deployed (aka stock purchased). If we are part of a big fund that fund may need to buy stocks in huge chunks and when the HFT sniffs out what they are buying they will raise the price.
    - nick_dm 11y ago
      The price has to go up anyway, that's what happens when demand increases, it's nothing to do with HFT. Large block trades like this will often be arrange over the counter (OTC) or on dark pools, so the fund purchasing the shares will get a fixed price and it's up to the market maker to deal with the execution risk in the open market. Edit: As Harryh said, large mutual fund managers believe that HFT allows them to get better prices for their customers: http://www.cnbc.com/2014/04/25/vanguard-chief-defends-high-frequency-trading-firms.html http://www.cnbc.com/2014/04/25/vanguard-chief-defends-high-f...
    - harryh 11y ago
      Vanguard (the manager of the world's biggest funds) has consistently stated that HFT market making has lowered their trading costs and increased returns for investors.
  - crdoconnor 11y ago
    Usually it's done on your behalf by institutional investors. The costs will be passed on to you in the form of less money once you retire.
librvf 11y ago
> Lots of things are illegible to the public. Explain to me all the processes involved in building the smart phone in your pocket. You can't. I can't. Probably no single person in the world can. Who cares? That's not true, not like HFT anyway. First, you can quickly and succinctly describe the traits and benefits of a smartphone. You can be high-level at first, you don't have to explain how every detail works. There's no question, for example, that a touch screen doesn't actually work as advertised. You can just say that a smartphone is a cellular/wireless computer device with a usefully large touch-screen display. In contrast, the unknown question with High-Frequency Trading is: is it actually providing value to anyone but the traders themselves? They might say they are "market-making" but are they really market-making (a trading role with proven market value) or are they merely exploiting structural inefficiencies in the trading infrastructure that mostly hurt everybody else? Maybe they are, but they should be able to describe it in a high level terms first (market-making, liquidity, etc.) where their role provides an obvious benefit to the market, and if you don't understand the high-level terms (eg liquidity) you can look them up. So far as I can tell (and I am willing to be proved wrong here) there is no consensus answer to the question of whether HFT is actually valuable to markets.
- harryh 11y ago
  I can quickly and succinctly describe the traits and benefits of HFT: Replacing slow expensive humans with fast and cheap computers has dramatically reduced the cost of trading. You can see this because buy/sell spreads have shrunk by at least 10x.
  - librvf 11y ago
    That's not what High-Frequency Trading means. The terms for what what you describe are the more general "electronic trading" and "automated trading". They enable HFT, but are not HFT. High-Frequency Trading, while also an umbrella term, virtually always refers to a subset of algorithmic trading involving arbitrage over extremely short timeframes. HFT is not about being faster than "slow expensive humans" it's about being microseconds faster than other HFTs.

by harryh 11y ago

dopamean 11y ago

I think the illegibility of it is important if it is affecting other people's finances.

harryh 11y ago
Nearly every good or service that you purchase is backed by a nearly illegible process of global trade. That doesn't affect your finances?
- pjc50 11y ago
  Doesn't it? The illegibility of offshore money affecting overall tax take and therefore government spending, services, and jobs? The illegibility of jobs disappearing to ... somewhere? Not knowing if you've bought products that have been manufactured by slave labour or just awful working conditions? It's not clear.
- crdoconnor 11y ago
  >Nearly every good or service that you purchase is backed by a nearly illegible process of global trade. That doesn't affect your finances? Yes it has, but why would you consider that a good thing? CAFTA and NAFTA have been pretty horrendous for the finances of Americans and TTIP and TPP are likely to be even worse. They can't be killed unless enough people understand them, either.
lmm 11y ago
No-one is being made worse-off by HFT except professional market-makers (who are being outcompeted) and perhaps professional buy-side traders (whose secrets leak out faster), both of whose job it is to understand the market. If you're a nonprofessional you should be investing with Vanguard or the like, and you benefit from HFT. If a layman with no expertise tries day-trading they're going to lose their money either way; we do have "must have this much money to be allowed to trade" laws, but those are controversial too for obvious reasons.

crdoconnor 11y ago

There's a pretty strong chance that your retirement funds are not being cannibalized by Samsung or Apple. Whereas, with HFT...

joosters 11y ago
Even if we all accept that HFTs are 'stealing' fractions of a penny per trade, just how often do you trade your retirement funds?
- djyaz1200 11y ago
  Much more often than you might think. Every time we make a deposit (likely monthly/bi/weekly) that money needs to be deployed (aka stock purchased). If we are part of a big fund that fund may need to buy stocks in huge chunks and when the HFT sniffs out what they are buying they will raise the price.
  - nick_dm 11y ago
    The price has to go up anyway, that's what happens when demand increases, it's nothing to do with HFT. Large block trades like this will often be arrange over the counter (OTC) or on dark pools, so the fund purchasing the shares will get a fixed price and it's up to the market maker to deal with the execution risk in the open market. Edit: As Harryh said, large mutual fund managers believe that HFT allows them to get better prices for their customers: http://www.cnbc.com/2014/04/25/vanguard-chief-defends-high-frequency-trading-firms.html http://www.cnbc.com/2014/04/25/vanguard-chief-defends-high-f...
  - harryh 11y ago
    Vanguard (the manager of the world's biggest funds) has consistently stated that HFT market making has lowered their trading costs and increased returns for investors.
- crdoconnor 11y ago
  Usually it's done on your behalf by institutional investors. The costs will be passed on to you in the form of less money once you retire.

librvf 11y ago

> Lots of things are illegible to the public. Explain to me all the processes involved in building the smart phone in your pocket. You can't. I can't. Probably no single person in the world can. Who cares? That's not true, not like HFT anyway. First, you can quickly and succinctly describe the traits and benefits of a smartphone. You can be high-level at first, you don't have to explain how every detail works. There's no question, for example, that a touch screen doesn't actually work as advertised. You can just say that a smartphone is a cellular/wireless computer device with a usefully large touch-screen display. In contrast, the unknown question with High-Frequency Trading is: is it actually providing value to anyone but the traders themselves? They might say they are "market-making" but are they really market-making (a trading role with proven market value) or are they merely exploiting structural inefficiencies in the trading infrastructure that mostly hurt everybody else? Maybe they are, but they should be able to describe it in a high level terms first (market-making, liquidity, etc.) where their role provides an obvious benefit to the market, and if you don't understand the high-level terms (eg liquidity) you can look them up. So far as I can tell (and I am willing to be proved wrong here) there is no consensus answer to the question of whether HFT is actually valuable to markets.

harryh 11y ago
I can quickly and succinctly describe the traits and benefits of HFT: Replacing slow expensive humans with fast and cheap computers has dramatically reduced the cost of trading. You can see this because buy/sell spreads have shrunk by at least 10x.
- librvf 11y ago
  That's not what High-Frequency Trading means. The terms for what what you describe are the more general "electronic trading" and "automated trading". They enable HFT, but are not HFT. High-Frequency Trading, while also an umbrella term, virtually always refers to a subset of algorithmic trading involving arbitrage over extremely short timeframes. HFT is not about being faster than "slow expensive humans" it's about being microseconds faster than other HFTs.