5 ms·

it isn't even a crude/primitive AI, it is just algorithms that are let loose for a limited periods of time in a limited activity space - and humans are already

it isn't even a crude/primitive AI, it is just algorithms that are let loose for a limited periods of time in a limited activity space - and humans are already feeling threatened(xenophobic) as this algorithmic trading feels completely unnatural. (The reason of fairness is complete BS because professional traders have always had informational and speed advantage, it is just that it was on the human scale - seconds vs. minutes, and now it crossed into non-human microseconds scale) Well, welcome to the 21st century. The algorithmic trading will look like a child play when in the "drone arm race", the sides would be forced to delegate final shoot decision to the drone algorithms for exactly the same reason - human speed wouldn't be enough as the millisecond advantage makes the critical difference between wining and loosing. That would be a reason to feel slightly xenophobic i guess, though we'll possibly get used to it :) Wrt. unfair advantage vs. investors not utilizing this advanced tool of algorithmic trading - whole human history since the time of apes is just a continuous sequence of "slow" humans being ruthlessly overtaken by other humans taking [unfair like any advantage] advantage through better tools and weapons. We're direct beneficiaries of such an unfair advantage and, as we aren't the ultimate goal, just an intermediate point in this history, we'll be a victims of it in due course of that history.

huhtenberg 15y ago
Here's your +1 to get you out of gray area, but WRT "Wrt. unfair advantage" you should really read up on HFT in detail. All of HFT is based on the premise of getting an access to the order flow a split second sooner than everyone else. To get such access HFT firms pay very hefty fee to Nasdaq and other exchanges. That's where the unfair advantage is - not in the use of computers, but in an exclusive access to the information that not even all banks can afford.
- MKT 15y ago
  everyone can purchase fast access. If a brokerage or a bank wanted to do it, they certainly could. It's like saying that Kinko's has an unfair advantage at making copies because it bought expensive copiers and regular folks have not.
  - joezydeco 15y ago
    I'd say it's more like Kinko's discovering you want to make some copies...and quickly erecting a store right outside your house so you stop there instead of Staples.
    - MKT 15y ago
      and what's wrong with that? Or rather, would you ban that too?
      - joezydeco 15y ago
        Yes, because that key word...discovering...implies that our rhetorical Kinko's has somehow gleaned advance knowledge that you're about to leave home to purchase some copies. I don't think HFT in general is ruining things. I think the ability of HFT firms to quickly enter orders and quickly widthdraw those same orders millions of times a minute enables them to gain some insight into the trading market that the market was never designed for. And I believe that is a perversion of the original open-call trading that the stock market was built upon. All buyers should be able to see the ask at the exact same time.
    - cellis 15y ago
      I think you still got it wrong. It is more like Kinkos discovering you need to make some copies and then buying up ALL the paper and ink at staples, and then setting up shop right outside your house, with a higher price :). I don't see anything wrong with this, it simply forces the market (theoretically) to hold on to valuable securities longer, which in theory would make it impossible for HFT firms to do this. In practice, everything is irrational, but it sure beats the pants off overregulation.
  - lwat 15y ago
    A better solution would be to reduce the granularity of trades to, for example, 1 second. Nobody needs to trade faster than that. If all trades are executed in a random order every 1 second rather than the current 'fastest fingers first' nothing would really change much in the world, just the HFTs would go away. HFT is a leech on the face of the financial world.
joe_the_user 15y ago
Uh, The stock market is a human institution that theoretically is not merely a battle field but competition which serves to allocate resources efficiently and for the benefit of people, ideally all people but certainly some people. Thus it seems legitimate to have regulations aimed to focus investment activity on questions that are really related to said resource allocation rather what is ultimately just clever front-running. I mean, the world's production, distribution and profits process might argued to change in second these days. But it will be a while before world-resources need to be reallocated by millisecond.

huhtenberg 15y ago

Here's your +1 to get you out of gray area, but WRT "Wrt. unfair advantage" you should really read up on HFT in detail. All of HFT is based on the premise of getting an access to the order flow a split second sooner than everyone else. To get such access HFT firms pay very hefty fee to Nasdaq and other exchanges. That's where the unfair advantage is - not in the use of computers, but in an exclusive access to the information that not even all banks can afford.

MKT 15y ago
everyone can purchase fast access. If a brokerage or a bank wanted to do it, they certainly could. It's like saying that Kinko's has an unfair advantage at making copies because it bought expensive copiers and regular folks have not.
- joezydeco 15y ago
  I'd say it's more like Kinko's discovering you want to make some copies...and quickly erecting a store right outside your house so you stop there instead of Staples.
  - MKT 15y ago
    and what's wrong with that? Or rather, would you ban that too?
    - joezydeco 15y ago
      Yes, because that key word...discovering...implies that our rhetorical Kinko's has somehow gleaned advance knowledge that you're about to leave home to purchase some copies. I don't think HFT in general is ruining things. I think the ability of HFT firms to quickly enter orders and quickly widthdraw those same orders millions of times a minute enables them to gain some insight into the trading market that the market was never designed for. And I believe that is a perversion of the original open-call trading that the stock market was built upon. All buyers should be able to see the ask at the exact same time.
  - cellis 15y ago
    I think you still got it wrong. It is more like Kinkos discovering you need to make some copies and then buying up ALL the paper and ink at staples, and then setting up shop right outside your house, with a higher price :). I don't see anything wrong with this, it simply forces the market (theoretically) to hold on to valuable securities longer, which in theory would make it impossible for HFT firms to do this. In practice, everything is irrational, but it sure beats the pants off overregulation.
- lwat 15y ago
  A better solution would be to reduce the granularity of trades to, for example, 1 second. Nobody needs to trade faster than that. If all trades are executed in a random order every 1 second rather than the current 'fastest fingers first' nothing would really change much in the world, just the HFTs would go away. HFT is a leech on the face of the financial world.

joe_the_user 15y ago

Uh, The stock market is a human institution that theoretically is not merely a battle field but competition which serves to allocate resources efficiently and for the benefit of people, ideally all people but certainly some people. Thus it seems legitimate to have regulations aimed to focus investment activity on questions that are really related to said resource allocation rather what is ultimately just clever front-running. I mean, the world's production, distribution and profits process might argued to change in second these days. But it will be a while before world-resources need to be reallocated by millisecond.