3 ms·
I don't know much about trading but would there really be any real harm in artifically slowing down trade, like only executing trades once per day? These event
by lutorm 17y ago
I don't know much about trading but would there really be any real harm in artifically slowing down trade, like only executing trades once per day?
These events all seem like mass psychosis to me, it's not like anyone can objectively evaluate the condition of the economy in the two minutes that is "a lifetime of trading". I thought for a market economy to work well, the actors need to rationally evaluate the consequences of their actions given all possible information. That's going to take some time for everyone, if trades happen faster then it's just basal instincts like fear that will govern the action.
The market is supposed to reflect the state of the economy, but somehow it's all backwards and more like the economy reflects the state of the market.
- chasingsparks 17y agoPeople experiment with things like that often. Search JStor for market structure or market mircostructure (especially O'Hare). Even in conventional markets there are periods of auctioning and alternative pricing structures. I studied it a while back, but the gist is that single day trading does not nullify panic or mania. At best, it is identical to continuous trading but it is most likely worse. Continuous trading works very well. The problem that is increasingly causing damage is the strong interdependence. Isolated manias and panics may actually be a good thing; when it represents a global tide however...
- yummyfajitas 17y agoSlowing down trading seemed to exacerbate this situation. NYSE slowed trading, held onto buys while routing sells to other exchanges in an effort to boost prices. The net result is that prices tanked at other exchanges, while NYSE was frozen. I'm not strictly opposed to trading halts/slowdowns under circumstances like last thursday, but they are a very tricky thing to do properly.