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> The things you describe explain why people keep their finger hovering over the "sell" button, they don't explain why precisely today they decided to press it.

by imron 9y ago

> The things you describe explain why people keep their finger hovering over the "sell" button, they don't explain why precisely today they decided to press it. How much was fingers on buttons, and how much was just automated trading algorithms?

fwdpropaganda 9y ago
Why is it that everything these days gets blamed on algorithms? Seems like intelectual laziness to me. "Algorithms did it, there's no sense to it, lets not think too hard."
- w0utert 9y ago
  I don't believe algorithms decide the direction of markets, but it's pretty clear that they amplify effects triggered by real-world conditions. HFT trading is just a way to make money, and things like large market swings, high trade volumes etc. provides interesting exploits to do exactly that. You could call it 'intellectual laziness', I would call it Occam's razor.
  - fwdpropaganda 9y ago
    You realize that these things happened before computers too, right? Saying "algorithms did it" is as much of Occam's as saying "god created the universe": it's certainly an easier explanation than studying high-energy physics.
  - OscarCunningham 9y ago
    If HFT makes money from the large swings then you would expect HFT to have made the large swings less common. Exploiting an inefficiency removes it.
- crucialfelix 9y ago
  Traders use mental algorithms. Portfolio managers write up trading plans with expectations, theories and the actions they intend to take. Computers are programmed to execute some of those algorithms. There isn't a dividing line between what algorithms in the heads of humans are doing and what the computers are doing, except that the computers are doing it several orders of magnitude faster.
- FabHK 9y ago
  "these days"? Algorithms were definitely a contributing factor to the 1987 Black Monday crash (in that case, "portfolio insurance", basically implementing a simple stop loss policy by going short (through direct sales, or purchases of puts)).
  - fwdpropaganda 9y ago
    Yes, these days. What's your problem?

by imron 9y ago

fwdpropaganda 9y ago

Why is it that everything these days gets blamed on algorithms? Seems like intelectual laziness to me. "Algorithms did it, there's no sense to it, lets not think too hard."

w0utert 9y ago
I don't believe algorithms decide the direction of markets, but it's pretty clear that they amplify effects triggered by real-world conditions. HFT trading is just a way to make money, and things like large market swings, high trade volumes etc. provides interesting exploits to do exactly that. You could call it 'intellectual laziness', I would call it Occam's razor.
- fwdpropaganda 9y ago
  You realize that these things happened before computers too, right? Saying "algorithms did it" is as much of Occam's as saying "god created the universe": it's certainly an easier explanation than studying high-energy physics.
- OscarCunningham 9y ago
  If HFT makes money from the large swings then you would expect HFT to have made the large swings less common. Exploiting an inefficiency removes it.
crucialfelix 9y ago
Traders use mental algorithms. Portfolio managers write up trading plans with expectations, theories and the actions they intend to take. Computers are programmed to execute some of those algorithms. There isn't a dividing line between what algorithms in the heads of humans are doing and what the computers are doing, except that the computers are doing it several orders of magnitude faster.
FabHK 9y ago
"these days"? Algorithms were definitely a contributing factor to the 1987 Black Monday crash (in that case, "portfolio insurance", basically implementing a simple stop loss policy by going short (through direct sales, or purchases of puts)).
- fwdpropaganda 9y ago
  Yes, these days. What's your problem?