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It's time to forbid bots and HFT. Want to buy/sell a stock? Humans need to manually submit in the system.

by brunoborges 3mo ago

ladberg 3mo ago
Why? Don't you prefer getting better prices when you want to go buy a stock?
- fluoridation 3mo ago
  I prefer a better price delta between buy and sell, which is blind to price hikes across the board.
  - ladberg 3mo ago
    That's exactly what "better prices" means...
    - fluoridation 3mo ago
      If I get a better price when I buy then someone else gets a better price when they buy too. (S + k) - (B + k) = S - B.
- stouset 3mo ago
  The argument is not that you get better prices, it’s that you get accurate prices. First, this definition has always been circular: what’s the most accurate price? The one the market comes up with. More market, more accuracy! Second, there is never any reconciliation of the costs society is saddled with in order to chase arbitrarily more accurate prices, the most obvious of which is the massive quantity of fat skimmed off by the financial services sector. Third, as an index investor, I more or less couldn’t care less. This hyperfixation on accuracy only really matters to people who are actively trading, which is already a fool’s game.
  - ladberg 3mo ago
    > First, this definition has always been circular: what’s the most accurate price? The one the market comes up with. More market, more accuracy! Market makers and HFT don't determine price: price is usually purely determined by the net inflows and outflows as decided by humans. MMs just smooth it out over time so everyone gets good pricing at the time and in the size they want it. > Second, there is never any reconciliation of the costs society is saddled with in order to chase arbitrarily more accurate prices By definition market makers are earning a fraction of the price improvement they provide, ergo the costs to society have to be less that the benefits for better pricing for the companies to stay in business! > Third, as an index investor, I more or less couldn’t care less As an index investor you should absolutely care! How do you think you are able to buy into the fund at a reasonable price? And then how do you think the fund is able to rebalance without transaction costs destroying performance long-term?
    - brunoborges 3mo ago
      > price is usually purely determined by the net inflows and outflows as decided by humans. "as decided by humans", more than 90% of trades are led by bots, so no, price is not being determined by humans. In fact, we have seen time and again how some weird companies get a huge inflow of purchases simply because of bots misinterpreting news articles.
      - ladberg 3mo ago
        It feels like you're intentionally omitting parts of what I said to make a point, and that I have no hope of correcting your world view, so just gonna clarify for any onlookers then stop arguing further. > > price is usually purely determined by the net inflows and outflows as decided by humans. > "as decided by humans", more than 90% of trades are led by bots, so no, price is not being determined by humans. You skipped past the "MMs just smooth it out over time so everyone gets good pricing at the time and in the size they want it" right afterwards which exactly explains why most trading is between bots! Person A wants to buy 10 shares of Y at time T1, Person B wants to sell 20 shares of Y at time T2, Person C wants to buy 10 shares of Y at time T3. Those are all at different times, therefore bots have to take the other side of each trade, then trade with each other to smooth out prices in between each point. > In fact, we have seen time and again how some weird companies get a huge inflow of purchases simply because of bots misinterpreting news articles. I actually clearly see this happening more with humans than with bots. Can you think of a single example attributed to bots? A bot that can misinterpret a news article and lose money is fixed and/or disabled forever. There is no shortage of dumb humans willing to lose money due to a lack of literacy.

It's time to forbid bots and HFT. Want to buy/sell a stock? Humans need to manually submit in the system.

ladberg 3mo ago

Why? Don't you prefer getting better prices when you want to go buy a stock?

fluoridation 3mo ago
I prefer a better price delta between buy and sell, which is blind to price hikes across the board.
- ladberg 3mo ago
  That's exactly what "better prices" means...
  - fluoridation 3mo ago
    If I get a better price when I buy then someone else gets a better price when they buy too. (S + k) - (B + k) = S - B.
stouset 3mo ago
The argument is not that you get better prices, it’s that you get accurate prices. First, this definition has always been circular: what’s the most accurate price? The one the market comes up with. More market, more accuracy! Second, there is never any reconciliation of the costs society is saddled with in order to chase arbitrarily more accurate prices, the most obvious of which is the massive quantity of fat skimmed off by the financial services sector. Third, as an index investor, I more or less couldn’t care less. This hyperfixation on accuracy only really matters to people who are actively trading, which is already a fool’s game.
- ladberg 3mo ago
  > First, this definition has always been circular: what’s the most accurate price? The one the market comes up with. More market, more accuracy! Market makers and HFT don't determine price: price is usually purely determined by the net inflows and outflows as decided by humans. MMs just smooth it out over time so everyone gets good pricing at the time and in the size they want it. > Second, there is never any reconciliation of the costs society is saddled with in order to chase arbitrarily more accurate prices By definition market makers are earning a fraction of the price improvement they provide, ergo the costs to society have to be less that the benefits for better pricing for the companies to stay in business! > Third, as an index investor, I more or less couldn’t care less As an index investor you should absolutely care! How do you think you are able to buy into the fund at a reasonable price? And then how do you think the fund is able to rebalance without transaction costs destroying performance long-term?
  - brunoborges 3mo ago
    > price is usually purely determined by the net inflows and outflows as decided by humans. "as decided by humans", more than 90% of trades are led by bots, so no, price is not being determined by humans. In fact, we have seen time and again how some weird companies get a huge inflow of purchases simply because of bots misinterpreting news articles.
    - ladberg 3mo ago
      It feels like you're intentionally omitting parts of what I said to make a point, and that I have no hope of correcting your world view, so just gonna clarify for any onlookers then stop arguing further. > > price is usually purely determined by the net inflows and outflows as decided by humans. > "as decided by humans", more than 90% of trades are led by bots, so no, price is not being determined by humans. You skipped past the "MMs just smooth it out over time so everyone gets good pricing at the time and in the size they want it" right afterwards which exactly explains why most trading is between bots! Person A wants to buy 10 shares of Y at time T1, Person B wants to sell 20 shares of Y at time T2, Person C wants to buy 10 shares of Y at time T3. Those are all at different times, therefore bots have to take the other side of each trade, then trade with each other to smooth out prices in between each point. > In fact, we have seen time and again how some weird companies get a huge inflow of purchases simply because of bots misinterpreting news articles. I actually clearly see this happening more with humans than with bots. Can you think of a single example attributed to bots? A bot that can misinterpret a news article and lose money is fixed and/or disabled forever. There is no shortage of dumb humans willing to lose money due to a lack of literacy.