4 ms·

Another reason to limit trading to daily or weekly or montly. The trading arms race is focusing on speed when it should be focusing on predicting longer term ou

Another reason to limit trading to daily or weekly or montly. The trading arms race is focusing on speed when it should be focusing on predicting longer term outcomes. The easiest way to do so would be to limit all trades to once per day in an auction system. Then traders would pour their resources into building sophisticated systems that make long range predictions and so also identify new innovations/companies that should exist in the market. This is in literally almost everyone's best interest - investors, public corp's, governments, consumer - only a small group of high-speed traders would disagree. Why this hasn't occurred yet is mind-boggling.

dclusin 14y ago
Trading has always been about speed. This dates back to the creation of the earliest financial markets (http://en.wikipedia.org/wiki/Rothschild_family http://en.wikipedia.org/wiki/Rothschild_family).
- marshallp 14y ago
  The evil Rothschild's are still costing today. A redistribution of wealth that was accumulated prior to 1900 should be instituted (or maybe for even before 1980).
darknoon 14y ago
Even if trades were only executed daily, wouldn't a futures market develop that was traded at the millisecond level anyway?
- marshallp 14y ago
  Reducing the trading increment is what a futures market does anyway (you can buy contracts to remove the volatility of second/minute/daily activity).
nancyhua 14y ago
High frequency traders talk about this and I heard about one being developed. Regulators and basically everyone you listed don't know what's in their best interest so it's up to the traders who decide they want to stop the arms race. It's hard to switch over bc traders go where the liquidity is so we'll have to see if they can overcome the chicken and egg problem.
Evbn 14y ago
24 hours is your definition of long-term investment?
- marshallp 14y ago
  I didn't say long-term investment. I said limit trading to once per day or week. Then resources will go towards creating predictive models in the longer time range than milliseconds/seconds etc. Even limiting to monthly would be good. Most real world projects (that directly benefit soceity) occur on days/weeks+ timescales. There's no reason for stock trading to occur faster than that since it's ultimate purpose is to finance those projects.
ArchD 14y ago
Suppose the NYSE has a new rule where trades only happen once a day, in a morning auction. Imagine that you just bought some stock at the auction in a certain company. Later on in the day, the company announces some catastrophic news, but you have to hold on to your stocks until the next day's auction, only to suffer great loss when you sell. Meanwhile, on a options exchange, a different exchange, where trading happens throughout the day because there is no such regulation, other investors in the same stock get to hedge their position by selling call options. They get to act ahead of you because their exchange has no such regulation. Unfortunately for whatever reason, you have no access to this venue. Should regulators regulate these exchanges as well? If they don't, someone will complain that it's unfair to people who have no access to such exotic venues. So, let's say they regulate all exchanges in the country. Then, people who really want to trade in the middle of the day have to do it the 'good' old-fashion way, away from the exchange, making phone calls to each other, through brokers, where there's less transparency and more chance for corruption and unfair deals because the fair price of an instrument is unclear due to the absence of exchange activity. This would be a step backward. Additionally, in terms of raising and reallocating capital, companies whose stocks are thus regulated will be at a disadvantage relative to their international counterparts whose stocks are more liquid in the absence of similar regulation, as capital tends to flow where trading is more convenient. So, this effect would impact the country's competitiveness as well.
- marshallp 14y ago
  If that's the case, things are so efficient that things will spill over in those ways, why not open the exchanges to everyone. Anyone should be able to list a company for zero cost, and anyone can purchase stock in anything for zero cost and no net worth requirements. The competitivness of the market will sort it all out.
  - ArchD 14y ago
    Unfortunately, Nasdaq and NYSE are not charitable organizations. They are for-profit companies. Why don't you go ahead and make history by creating the type of exchange you described? I don't see how the law would intrinsically stop you, though the economics of running a company might.

dclusin 14y ago

Trading has always been about speed. This dates back to the creation of the earliest financial markets (http://en.wikipedia.org/wiki/Rothschild_family http://en.wikipedia.org/wiki/Rothschild_family).

marshallp 14y ago
The evil Rothschild's are still costing today. A redistribution of wealth that was accumulated prior to 1900 should be instituted (or maybe for even before 1980).

darknoon 14y ago

Even if trades were only executed daily, wouldn't a futures market develop that was traded at the millisecond level anyway?

marshallp 14y ago
Reducing the trading increment is what a futures market does anyway (you can buy contracts to remove the volatility of second/minute/daily activity).

nancyhua 14y ago

High frequency traders talk about this and I heard about one being developed. Regulators and basically everyone you listed don't know what's in their best interest so it's up to the traders who decide they want to stop the arms race. It's hard to switch over bc traders go where the liquidity is so we'll have to see if they can overcome the chicken and egg problem.

Evbn 14y ago

24 hours is your definition of long-term investment?

marshallp 14y ago
I didn't say long-term investment. I said limit trading to once per day or week. Then resources will go towards creating predictive models in the longer time range than milliseconds/seconds etc. Even limiting to monthly would be good. Most real world projects (that directly benefit soceity) occur on days/weeks+ timescales. There's no reason for stock trading to occur faster than that since it's ultimate purpose is to finance those projects.

ArchD 14y ago

Suppose the NYSE has a new rule where trades only happen once a day, in a morning auction. Imagine that you just bought some stock at the auction in a certain company. Later on in the day, the company announces some catastrophic news, but you have to hold on to your stocks until the next day's auction, only to suffer great loss when you sell. Meanwhile, on a options exchange, a different exchange, where trading happens throughout the day because there is no such regulation, other investors in the same stock get to hedge their position by selling call options. They get to act ahead of you because their exchange has no such regulation. Unfortunately for whatever reason, you have no access to this venue. Should regulators regulate these exchanges as well? If they don't, someone will complain that it's unfair to people who have no access to such exotic venues. So, let's say they regulate all exchanges in the country. Then, people who really want to trade in the middle of the day have to do it the 'good' old-fashion way, away from the exchange, making phone calls to each other, through brokers, where there's less transparency and more chance for corruption and unfair deals because the fair price of an instrument is unclear due to the absence of exchange activity. This would be a step backward. Additionally, in terms of raising and reallocating capital, companies whose stocks are thus regulated will be at a disadvantage relative to their international counterparts whose stocks are more liquid in the absence of similar regulation, as capital tends to flow where trading is more convenient. So, this effect would impact the country's competitiveness as well.

marshallp 14y ago
If that's the case, things are so efficient that things will spill over in those ways, why not open the exchanges to everyone. Anyone should be able to list a company for zero cost, and anyone can purchase stock in anything for zero cost and no net worth requirements. The competitivness of the market will sort it all out.
- ArchD 14y ago
  Unfortunately, Nasdaq and NYSE are not charitable organizations. They are for-profit companies. Why don't you go ahead and make history by creating the type of exchange you described? I don't see how the law would intrinsically stop you, though the economics of running a company might.