4 ms·

I'm struggling to see exactly what you're saying beyond "the way things are now suits me fine, and you can't do anything about it, so nyah to you".

lrm242 16y ago
Interesting. How about this: the rules of the market must be as general as possible to encourage as many participants with competing motivations to participate. Doing anything but this will create a market that is, by definition, less efficient and more costly. Simple enough for you?
- borism 16y ago
  Less efficient and more costly might be acceptable trade-off depending on "by how much?" Like you say market shouldn't be favoring one type of participant over another. Seems to me like market favors HFT guys more than others these days.
  - joe_the_user 16y ago
    ... except he's saying the market should accommodate them... As far as I can see, HFT makes the market more costly, allocates capital less efficiently and doesn't do so for any "greater good" but the enrichment of a connected few who talk about a rather odd kind of efficiency ... sure, tapping your competitor's phone is another highly "efficient" way to make profits as well.
    - borism 16y ago
      care to explain the difference between "shouldn't be favoring" and "should accommodate"?
      - joe_the_user 16y ago
        "Should accommodate X" means that you should not make policy that is unfavorable to X. He's saying that the market should be open to all strategies. There's no statement in there saying that the market should stop favoring one or another strategy. This comes because others have have implied that the present system is favoring HFT and he's basically rebutting those claims using this argument.
- chipsy 16y ago
  I agree. Alternately, one could make a Darwinian analogy. The market should accommodate as many strategies as possible(biodiversity) to ensure its stability. The market has changed to incorporate new, high-tech strategies, but this is actually a good thing as it can increase diversity - so long as no one strategy is dominant. An ideal market would snap to an exact valuation of companies and commodities, and adjust instantly with each passing second; but our markets are not sufficiently informed on the fundamentals to do such a thing. Hence we'll always have some trading action take place around the true price, in which speculators attempt to beat the market psychology. What we're doing is accelerating the speculation, shortening the timeframes for everything; this doesn't just increase liquidity, but also increases the average spread of prices over a given time period. This could be seen as a better reflection of market uncertainty over true price.
  - joe_the_user 16y ago
    The market should accommodate as many strategies as possible(biodiversity) to ensure its stability. ... except that all evidence points to the various "new" strategies moving things towards instability...
- beagle3 16y ago
  That's a good definition. If you compare market mechanics in any US exchange to e.g. Eurex, you see that in almost every place they are different, there's a player in the US that uses that difference to generate essentially risk-free profit. I'm sure there are similar problems in Eurex -- only much, much fewer, and less visibly exploited. US markets are totally broken.
- joe_the_user 16y ago
  "the rules of the market must be as general as possible to encourage as many participants with competing motivations to participate." What does "general" mean? Does it mean fair? If markets are a total free-for-all, then the largest investors crush the smaller ones seven-ways-from-Sunday, with flash being only one in a long line of schemes. The "only problem" with these schemes is if they are too visible, the smaller investors realize they just don't want play at all. It might be safer and more efficient to have only the big boys investing with each other while small investors keep their money in banks. And it might more efficient for most people to rent their houses rather than buying. But America for whatever public policy reasons wants to keep the middle-income folks feeling like they have various stakes in the country so policy favors an apparently fair stock market and subsidizes home ownership. Good or bad? You decide... And if you privatize everything, I'm going to buy the tanks...

lrm242 16y ago

Interesting. How about this: the rules of the market must be as general as possible to encourage as many participants with competing motivations to participate. Doing anything but this will create a market that is, by definition, less efficient and more costly. Simple enough for you?

borism 16y ago
Less efficient and more costly might be acceptable trade-off depending on "by how much?" Like you say market shouldn't be favoring one type of participant over another. Seems to me like market favors HFT guys more than others these days.
- joe_the_user 16y ago
  ... except he's saying the market should accommodate them... As far as I can see, HFT makes the market more costly, allocates capital less efficiently and doesn't do so for any "greater good" but the enrichment of a connected few who talk about a rather odd kind of efficiency ... sure, tapping your competitor's phone is another highly "efficient" way to make profits as well.
  - borism 16y ago
    care to explain the difference between "shouldn't be favoring" and "should accommodate"?
    - joe_the_user 16y ago
      "Should accommodate X" means that you should not make policy that is unfavorable to X. He's saying that the market should be open to all strategies. There's no statement in there saying that the market should stop favoring one or another strategy. This comes because others have have implied that the present system is favoring HFT and he's basically rebutting those claims using this argument.
chipsy 16y ago
I agree. Alternately, one could make a Darwinian analogy. The market should accommodate as many strategies as possible(biodiversity) to ensure its stability. The market has changed to incorporate new, high-tech strategies, but this is actually a good thing as it can increase diversity - so long as no one strategy is dominant. An ideal market would snap to an exact valuation of companies and commodities, and adjust instantly with each passing second; but our markets are not sufficiently informed on the fundamentals to do such a thing. Hence we'll always have some trading action take place around the true price, in which speculators attempt to beat the market psychology. What we're doing is accelerating the speculation, shortening the timeframes for everything; this doesn't just increase liquidity, but also increases the average spread of prices over a given time period. This could be seen as a better reflection of market uncertainty over true price.
- joe_the_user 16y ago
  The market should accommodate as many strategies as possible(biodiversity) to ensure its stability. ... except that all evidence points to the various "new" strategies moving things towards instability...
beagle3 16y ago
That's a good definition. If you compare market mechanics in any US exchange to e.g. Eurex, you see that in almost every place they are different, there's a player in the US that uses that difference to generate essentially risk-free profit. I'm sure there are similar problems in Eurex -- only much, much fewer, and less visibly exploited. US markets are totally broken.
joe_the_user 16y ago
"the rules of the market must be as general as possible to encourage as many participants with competing motivations to participate." What does "general" mean? Does it mean fair? If markets are a total free-for-all, then the largest investors crush the smaller ones seven-ways-from-Sunday, with flash being only one in a long line of schemes. The "only problem" with these schemes is if they are too visible, the smaller investors realize they just don't want play at all. It might be safer and more efficient to have only the big boys investing with each other while small investors keep their money in banks. And it might more efficient for most people to rent their houses rather than buying. But America for whatever public policy reasons wants to keep the middle-income folks feeling like they have various stakes in the country so policy favors an apparently fair stock market and subsidizes home ownership. Good or bad? You decide... And if you privatize everything, I'm going to buy the tanks...