4 ms·
Meh, the short term price fluctuations are almost pure noise. Faster trading just incase the frequency of the noise. Increasing frequency only works if the feed
by NohatCoder 7y ago
Meh, the short term price fluctuations are almost pure noise. Faster trading just incase the frequency of the noise. Increasing frequency only works if the feedback loops are stable.
- 1e-9 7y agoOver very short time scales, the price fluctuations vary from almost pure noise to almost pure signal. The almost pure noise situation occurs far more often, but even then, with good estimation techniques, you can extract a signal component that can improve pricing a small amount. Improving many interrelated prices by small amounts can lead to a significant overall improvement to the markets. The almost pure signal situation occurs far less often, but it is almost always extremely important to overall stability. Handling it well can minimize market overreactions and extreme events such as flash crashes and market panics.
- NohatCoder 7y agoThe faster you can trade, the faster you can flash crash. The current state is that bots can crash the market faster than humans can react, how does that help stability?
- 1e-9 7y agoThe faster you trade, the faster you can detect and help limit or prevent a flash crash caused by others trading poorly.