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Arbitrage-exploiters do the worthwhile task of removing arbitrage. Putting arbitrage back into the market, visible to everybody but which everybody will sit on
by hugh3 17y ago
Arbitrage-exploiters do the worthwhile task of removing arbitrage. Putting arbitrage back into the market, visible to everybody but which everybody will sit on their hands until it becomes worth the 25 cent fee to exploit, seems like a way to create more instability.
- _delirium 17y agoIt can add instability though, if the arbitrage-exploiting is too large a proportion of the market. If 95%+ of trades are trades based on statistical market patterns, which are themselves created by those same 95%+ of trades, you get weird feedback loops that have more to do with chaotic systems and attractors than with supply or demand.
- hugh3 17y agoLooking at prices of any given share for any day other than Thursday (was it Thursday?) would you say that such instability and big feedback loops are a big problem?