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You want short term trading because you want the prices to be as close to efficient as possible. You may never trade short term but at some point you are going
by bluecalm 1mo ago
You want short term trading because you want the prices to be as close to efficient as possible.
You may never trade short term but at some point you are going to buy and at some point you are going to sell. Market being far from efficient one would hurt you there.
So let them trade and discover price. You don't have to play that game but you still benefit.
- ambicapter 1mo agoLong-term traders don't need the price to be as "efficient" as possible by definition.
- orangecat 1mo agoMaybe an extra 1% spread doesn't matter if you buy and hold for 50 years, but for 2 years it absolutely does.
- amelius 1mo agoHow much will it hurt me? Maybe I'm OK with being hurt through the markets if it means the world is a saner and more fair place?
- orangecat 1mo agoOk, and how does banning short-term trading make the world more fair?
- amelius 1mo agoFor one thing because now people who own high-speed low-latency connections to stock markets have no advantage over "normal" people who actually do meaningful work, like being a policeman or nurse.
- logicchains 1mo ago>people who actually do meaningful work, like being a policeman Making a sudden event that happened on the other side of the world reflect in the local market price at almost the speed of light is far more meaningful work than going around shooting dark-skinned people.
- amelius 1mo agoIf this is how people in finance think, then this only makes my point stronger. The financial world is disconnected from reality and needs to be restrained.
- azan_ 1mo agoPrice discovery and increasing liquidity is meaningful work.
- amelius 1mo agoTo a very limited extent, maybe.
- bluecalm 1mo agoInefficient market means someone is getting a bad price. That someone is going to be a retail/naive investor - Bill and Nancy who want to invest in Apple with part of their salary. Sophisticated investors would never be on the other side of the trade. Add to that bigger spreads and unsophisticated market participants get fleeced. As they wouldn't want to get fleeced they would hire an intermediary to do trades for them - a stock broker who again charges commission. We already had that: spreads were bigger, prices were less efficient. The main victims were retail/naive investors and the main beneficiaries would be big institutions, brokers and sophisticated investors. Current system benefits: -retail/unsophisticated investors -vanishingly small group of the best/fastest/most sophisticated traders Who lost: -big institutions, banks, stock brokers -investing wannabes who no longer get access to easy money from retail/naive buyers You seem to assume there is a pool of sharks that prey on pure souls without fast connection. It's not the case at all. Most HFTs lose money without exchange incentives which are provided because exchanges understand liquidity and low spreads are good for other participants. The pool of people who make money out of spreads/inefficient prices is way lower than it used to be as well. The best possible world would have efficient prices every nano-second coming from god himself. Having a group of very sophisticated market makers is the second best we can have - at least if you care about normal investors who don't have resources to process all the information themselves.
- cyberax 1mo ago> You want short term trading because you want the prices to be as close to efficient as possible But do I want the prices to be as efficient as possible?
- amelius 1mo agoIf this whole efficiency argument means I'm going to make $1 more per month while some lousy traders make $100k more per month, then I'd say: to hell with "efficiency". Fairness and wealth equality are more important to me than $1. Also considering that these traders will use their $100k in ways that my $1 will become worth even less. For example by buying all the housing in my neighborhood and thereby increasing my rent.
- logicchains 1mo agoWithout that efficiency it'd be like the old days before electronic trading where you're paying 100x larger fees to a crusty old brokerage any time you want to trade.
- amelius 1mo agoDoesn't matter. Banning short term trading will also reduce # trade events, so the fees don't matter.
- cyberax 1mo agoWhy would the fees be bigger? The old brokerages had to do manual work to put the bid on the trading floor. Electronic trading doesn't need to go away. The trade itself might take some time instead of being functionally instant, but that's fine.
- azan_ 1mo agoIt’s amazing how successful populism is, even HN is now full of populistic comments.
- amelius 1mo ago