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While ultimately I do agree with you, especially about humans trying to beat HFT in the short term, I don't think HFT and algorithmic trading are _currently_ th
by mej10 14y ago
While ultimately I do agree with you, especially about humans trying to beat HFT in the short term, I don't think HFT and algorithmic trading are _currently_ the panacea you are making them out to be.
http://en.wikipedia.org/wiki/2010_Flash_Crash http://en.wikipedia.org/wiki/2010_Flash_Crash
- BenoitEssiambre 14y agoI agree that the system is not perfect because, lets face it, computers are not always that reliable. However, this is a problem that solves itself. If an algorithm goes haywire and drives the market down temporarily, that computer stands to lose a whole lot of money so there is tons on incentives to fix or retire that particular machine. Otherwise it would be easy to make a very profitable algorithm on the back of the machines that create flash crashes by detecting those crashes and buying tons of shares when they are discounted in order to sell them back when prices returns to rational levels. By buying on the crash this algorithm would push the price up thus reducing the price swing.