3 ms·
Can you explain how this "improved" liquidity benefits actual people? It seems to be an assumption that any increase in liquidity is always beneficial. I've nev
by hackinthebochs 15y ago
Can you explain how this "improved" liquidity benefits actual people? It seems to be an assumption that any increase in liquidity is always beneficial. I've never seen an actual explanation arguing how.
To put it another way, how do we know the function of liquidity to net human benefit is monotonic (always increasing) rather than having a local maximum?
- andylei 15y ago> For large stocks in particular, algorithmic trading narrows spreads lower spreads means you pay less when you trade, simple.
- wisty 15y agoBasically, algorithmic traders are disrupting what traditional traders used to do. In the future, Wall Street will be replaced with a couple of big server farms, and a Demand-Media style bidding system for commoditized stock analysts. Imagine it - "Earn cash in your spare time - estimate the future profits of Fortune 500 companies, and plug them into a structured database! Senior members represent us on boards of directors, telling CEOs what the computer thinks they are really worth! (payments contingent on the long-term value of your work)."
- hackinthebochs 15y agoForgive my ignorance, but how so? How does the wealth extracted from the transaction play into this (arbitrage extracts value from a transaction, ideally it's made up for through liquidity).