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Love Cuban, but his target is program trading, not Wall Street. And trading serves its purpose as it makes the market more efficient. Arbitrage opportunities

Love Cuban, but his target is program trading, not Wall Street. And trading serves its purpose as it makes the market more efficient. Arbitrage opportunities will always narrow or close over time. His argument is like saying that someone that buys and sells used cars has a big advantage over me the consumer, therefore buying a car is rigged. I know that implicitly, it's the friction of low transacting.

uptown 14y ago
Someone buying and selling used cars doesn't have the ability to crash the entire car market negatively affecting everyone that currently owns a car in the same way that high-frequency trading can with the stock market. I don't think your analogy works.
- dawernik 14y ago
  Those crashes primarily impact professionals... I'm not familiar with any enduring crash with sustaind impact to retail investors. I'm sure the value created by tightening spreads and creating volume dwarfs the cost of a momentary crash that impacts other professional traders (and a small fraction of retail traders). I'm not saying that high frequency trading isn't shady, but it also serves a purpose. And I don't think the objective is to crash a market, it's to make money. These traders don't want scrutiny, so they are personally motivated to maintain order.
  - adambyrtek 14y ago
    Individuals are also affected by decisions made by professional traders (e.g. mutual or retirement funds). Maybe crashing the market is not the objective, but it could be an unintended consequence, and the only real motivation is short-term profit, not "maintaining order" in fear of some hypothetical future regulation.
    - dawernik 14y ago
      When did the length of the period of speculation become the moral compass for whether someone should be allowed to put their capital at risk. I still think that everyone is missing a key point. There is huge value in programatic trading. The frequency of a crash with impact to retail investors (not traders willingly risking money speculatively) relative to the volume of spread tightening trading approaches zero.
      - adambyrtek 14y ago
        It was not my intention to claim whether high-frequency trading is "good" or "bad". To be honest I don't think I have enough information to judge that. I just replied to your specific arguments which I considered wrong. That said, I agree that rejecting algorithmic trading just because it's new, different, and scary doesn't seem like the best approach. Computers have disrupted most industries, and the financial industry is just one of them.
- JumpCrisscross 14y ago
  The used car market is also terribly inefficient.
Lagged2Death 14y ago
Love Cuban, but his target is program trading, not Wall Street. It is my understanding that program trading and HFT account for 99+ percent of the trade volume at this point; how shall we even distinguish Wall Street from automated trading then?
- dawernik 14y ago
  Trading is different from the initiation of capital investments through different vehicles like stock and bond issuance and the creation of value through M&A. Again, if the argument is trading specific versus wall street abstract, there is a point to be made. Think how much bacteria is in our body, take it all out and we don't run as efficiently. program trading is the same.

uptown 14y ago

Someone buying and selling used cars doesn't have the ability to crash the entire car market negatively affecting everyone that currently owns a car in the same way that high-frequency trading can with the stock market. I don't think your analogy works.

dawernik 14y ago
Those crashes primarily impact professionals... I'm not familiar with any enduring crash with sustaind impact to retail investors. I'm sure the value created by tightening spreads and creating volume dwarfs the cost of a momentary crash that impacts other professional traders (and a small fraction of retail traders). I'm not saying that high frequency trading isn't shady, but it also serves a purpose. And I don't think the objective is to crash a market, it's to make money. These traders don't want scrutiny, so they are personally motivated to maintain order.
- adambyrtek 14y ago
  Individuals are also affected by decisions made by professional traders (e.g. mutual or retirement funds). Maybe crashing the market is not the objective, but it could be an unintended consequence, and the only real motivation is short-term profit, not "maintaining order" in fear of some hypothetical future regulation.
  - dawernik 14y ago
    When did the length of the period of speculation become the moral compass for whether someone should be allowed to put their capital at risk. I still think that everyone is missing a key point. There is huge value in programatic trading. The frequency of a crash with impact to retail investors (not traders willingly risking money speculatively) relative to the volume of spread tightening trading approaches zero.
    - adambyrtek 14y ago
      It was not my intention to claim whether high-frequency trading is "good" or "bad". To be honest I don't think I have enough information to judge that. I just replied to your specific arguments which I considered wrong. That said, I agree that rejecting algorithmic trading just because it's new, different, and scary doesn't seem like the best approach. Computers have disrupted most industries, and the financial industry is just one of them.
JumpCrisscross 14y ago
The used car market is also terribly inefficient.

Lagged2Death 14y ago

Love Cuban, but his target is program trading, not Wall Street. It is my understanding that program trading and HFT account for 99+ percent of the trade volume at this point; how shall we even distinguish Wall Street from automated trading then?

dawernik 14y ago
Trading is different from the initiation of capital investments through different vehicles like stock and bond issuance and the creation of value through M&A. Again, if the argument is trading specific versus wall street abstract, there is a point to be made. Think how much bacteria is in our body, take it all out and we don't run as efficiently. program trading is the same.