4 ms·

Your intuition about financial markets does not match reality. In financial markets no one knows that you want to buy a gallon of milk (or a share of stock) unt

by harryh 10y ago

Your intuition about financial markets does not match reality. In financial markets no one knows that you want to buy a gallon of milk (or a share of stock) until your bid has already been submitted. No matter how fast their Ferrari, there is no way for them to get in line ahead of you at the store.

phonon 10y ago
Maybe you should read "Flash Boys" then. They can and do. Orders start at one place, and by regulation then can get sent to many other markets. If you can go to those next markets a little faster, you can front run the order.
- harryh 10y ago
  Maybe you should read "Flash Boys: Not So Fast" then. It highlights a lot of errors in Flash Boys (which I have, in fact, read). https://www.amazon.com/Flash-Boys-Insiders-Perspective-High-Frequency-ebook/dp/B00P0QI2M2 https://www.amazon.com/Flash-Boys-Insiders-Perspective-High-...
- MichaelGG 10y ago
  Flash Boys uses a totally fabricated use of "front running". It's worse than people that call copyright infringement "theft". That book is probably one of the worst books I've read as far as accuracy goes. At least that I'm aware of. Seriously, at one point, Lewis suggests that the trading station of some big trader is hacked. That just by typing numbers without submitting an order, stuff jumps. This should send huge red flags off on anyone that's even remotely familiar with anything similar to a computer. But it's another "see how rigged it all is?" anecdote blended in with his nonsense.
  - 15thandwhatever 10y ago
    Some programmers don't understand latency, so there's no hope for anyone who's not familiar with software development to wrap their head around the concept of "yes, things happen in milliseconds". Which makes it all the more easier to get away with anything that sounds as sensational as this. https://gist.github.com/jboner/2841832 https://gist.github.com/jboner/2841832
whoops1122 10y ago
Ohh there is a way to do it, and it is a show on 60/60. I think to be specific, there is a delay between NJ switch to Wall st, so some ppl tap in the switch in NJ, know what you plan on to order, then make their order use a different route to wall st... this was well documented. I dont know if it still exist though.
- 15thandwhatever 10y ago
  This is the complete opposite of what is happening. What you're describing is straight up hacking, and if there was as clear of a breach of the law like that, we wouldn't be having civil discussions about whether HFT is good or not. Besides, almost nothing routes to Wall Street anymore. Especially not for stocks. NASDAQ's trading platform is in Carteret, NJ. NYSE's trading platform is in Mahwah, NJ. Most HFT firms, if they're not already colocated in Carteret or Mahwah, are located in Secaucus, NJ.
hm8 10y ago
Well, there is in a matter of speaking. To take the analogy further, imagine not buying a gallon of milk but 100,000 1 gallon can of milk. The guy with the Ferrari wouldn't be able to get in front of you at the next door target but they'll loot the most convenient Walgreens, Safeway, Walmart, and Amazon Prime. Of course, the analogy no longer holds for numerous reasons (100000 gallons of milk, driving around, buying from the farms directly) but the point is the Flash Boys work on the likelihood of such an event happening which, believe it or not, is fairly common in the stock markets these days. Think, mutual funds, ETF managers, etc. This is now, largely, considered the cost of doing business.
- harryh 10y ago
  If you want to by 100,000 gallons of milk you don't have a god given right to do so at the currently posted prices in every grocery store in town. Those grocers are well within their rights to raise prices as soon as they figure out what you're doing.
  - hm8 10y ago
    The grocers' price is irrelevant to the discussion here. The guy with the Ferrari would still outrun you and offer you a new price, with a margin just enough for them to be profitable, yet not substantially large as to talk you out of the deal altogether.
    - harryh 10y ago
      Once the grocers raise their prices, there's no margin left for the Ferrari owner to capture.
      - hm8 10y ago
        There is still a margin if the intended buyer was willing to pay more or would just want to buy the milk at whatever price offered. Of course, the grocers could keep raising the price arbitrarily but there is still a delta that the guy in the Ferrari could overcharge. I think you understand the point we are trying to get across but just trolling it. I'd have appreciated an honest discussion rather than a trolling attitude.

by harryh 10y ago

phonon 10y ago

Maybe you should read "Flash Boys" then. They can and do. Orders start at one place, and by regulation then can get sent to many other markets. If you can go to those next markets a little faster, you can front run the order.

harryh 10y ago
Maybe you should read "Flash Boys: Not So Fast" then. It highlights a lot of errors in Flash Boys (which I have, in fact, read). https://www.amazon.com/Flash-Boys-Insiders-Perspective-High-Frequency-ebook/dp/B00P0QI2M2 https://www.amazon.com/Flash-Boys-Insiders-Perspective-High-...
MichaelGG 10y ago
Flash Boys uses a totally fabricated use of "front running". It's worse than people that call copyright infringement "theft". That book is probably one of the worst books I've read as far as accuracy goes. At least that I'm aware of. Seriously, at one point, Lewis suggests that the trading station of some big trader is hacked. That just by typing numbers without submitting an order, stuff jumps. This should send huge red flags off on anyone that's even remotely familiar with anything similar to a computer. But it's another "see how rigged it all is?" anecdote blended in with his nonsense.
- 15thandwhatever 10y ago
  Some programmers don't understand latency, so there's no hope for anyone who's not familiar with software development to wrap their head around the concept of "yes, things happen in milliseconds". Which makes it all the more easier to get away with anything that sounds as sensational as this. https://gist.github.com/jboner/2841832 https://gist.github.com/jboner/2841832

whoops1122 10y ago

Ohh there is a way to do it, and it is a show on 60/60. I think to be specific, there is a delay between NJ switch to Wall st, so some ppl tap in the switch in NJ, know what you plan on to order, then make their order use a different route to wall st... this was well documented. I dont know if it still exist though.

15thandwhatever 10y ago
This is the complete opposite of what is happening. What you're describing is straight up hacking, and if there was as clear of a breach of the law like that, we wouldn't be having civil discussions about whether HFT is good or not. Besides, almost nothing routes to Wall Street anymore. Especially not for stocks. NASDAQ's trading platform is in Carteret, NJ. NYSE's trading platform is in Mahwah, NJ. Most HFT firms, if they're not already colocated in Carteret or Mahwah, are located in Secaucus, NJ.

hm8 10y ago

Well, there is in a matter of speaking. To take the analogy further, imagine not buying a gallon of milk but 100,000 1 gallon can of milk. The guy with the Ferrari wouldn't be able to get in front of you at the next door target but they'll loot the most convenient Walgreens, Safeway, Walmart, and Amazon Prime. Of course, the analogy no longer holds for numerous reasons (100000 gallons of milk, driving around, buying from the farms directly) but the point is the Flash Boys work on the likelihood of such an event happening which, believe it or not, is fairly common in the stock markets these days. Think, mutual funds, ETF managers, etc. This is now, largely, considered the cost of doing business.

harryh 10y ago
If you want to by 100,000 gallons of milk you don't have a god given right to do so at the currently posted prices in every grocery store in town. Those grocers are well within their rights to raise prices as soon as they figure out what you're doing.
- hm8 10y ago
  The grocers' price is irrelevant to the discussion here. The guy with the Ferrari would still outrun you and offer you a new price, with a margin just enough for them to be profitable, yet not substantially large as to talk you out of the deal altogether.
  - harryh 10y ago
    Once the grocers raise their prices, there's no margin left for the Ferrari owner to capture.
    - hm8 10y ago
      There is still a margin if the intended buyer was willing to pay more or would just want to buy the milk at whatever price offered. Of course, the grocers could keep raising the price arbitrarily but there is still a delta that the guy in the Ferrari could overcharge. I think you understand the point we are trying to get across but just trolling it. I'd have appreciated an honest discussion rather than a trolling attitude.