9 ms·

If there was a similar video showing all of the electronic sensors of a modern airliner flowing into the central flight control computer would it would engender

by minimax 13y ago

If there was a similar video showing all of the electronic sensors of a modern airliner flowing into the central flight control computer would it would engender the same sort of trepidation about air travel? Should we be afraid of something just because it's "complicated" to someone unfamiliar with the state of the art? There are a lot of valid criticisms you can make about modern financial markets, but claiming that we are using computers to do things better than we did 10 years ago is a bad thing isn't something I'd expect to see here on HN.

jussij 13y ago
> but claiming that we are using computers to do things better than we did 10 years ago is a bad thing But they are not using those computer to do something better, they are using those computers to do something that was impossible 10 years ago. The problem I have with HST is what purpose does it serve, other than offer another way to gamble on stock price movements. Now there is nothing new about gambling on stock price movements but with HST it takes the control out of the market and puts it into the hands of a bunch of computer programs. And to say that can't cause problems, you have to look no further than the hoax bomb at the white house tweet that wiped out $130 billion in market value in the matter of seconds. Without those HST computers system all trying to out do each other, that event would not have been so dramatic.
- Rangi42 13y ago
  If you can trade faster, the market can react to information faster. Stocks dropped almost as soon as the tweet was released, without needing to wait for a few major news channels -- and recovered in five minutes after people stopped panicking.[1] [1] http://21stcenturywire.com/2013/04/24/white-house-attacked-obama-injured-ap-tweet-hoax-crashes-us-stock-market/ http://21stcenturywire.com/2013/04/24/white-house-attacked-o...
  - jussij 13y ago
    So by making the system trade faster, they have made the market less stable and opened it up to outside manipulation. Hardly what you call progress.
    - marshray 13y ago
      Outside "manipulation" has always been a force in markets. Perhaps HFT is making the system faster to recover to false information? Or maybe it's just another zero-sum scheme for moving money from the rich to the very rich. Heck I dunno.
  - nhaehnle 13y ago
    The question is: Does fast trading provide a net positive to society? Real investment decisions - as in, decisions of which factories to build, which products to develop, who to hire, and so on - are made on a time-scale of weeks or months. Having the stock market react on a sub-second time scale certainly has no effect at all on those decisions. To gain some perspective, consider if trading operated on an hourly-auction type system. The stock price would react slower and in a different manner that it does today, and that could change the income distribution among traders. But honestly, why should anyone care? When it comes down to it, there is no upside to trades going that fast to anyone outside of the myopic circle of professional traders. Even those professional traders only have an upside as long as they participate in a vicious arms race. However, there are downsides. One downside that many people argue is that the resulting distribution of income is not just, because HST firms suck a revenue stream out of the economy without building anything real. The more important downside (in my opinion) is that HST sucks intelligent people away from sectors of the economy where they would positively contribute by developing and improving directly useful technology.
    - vasyainv 13y ago
      Why do you assume that those intelligent people would not engage in some other little value add activity that can make them a lot of money. How much value add do most web social startups provide? The main feature of capitalist economy is that it allows people to work on whatever they want and not on something that some higher authority deems to be "useful"
      - rayiner 13y ago
        There is no money in doing really useful things. As long as that's true, lots of smart people will instead find debatably somewhat useful things to do that pay more money.
      - nhaehnle 13y ago
        The main feature of capitalist economy is that it allows people to work on whatever they want Completely off-topic to the original discussion, but assuming that you intended to imply the quantifier that I think you implicitly intended to imply - i.e., "all people", or even "most people" - you must be living in a completely different world and/or a very cushy bubble. [1] I expect many people on this site are lucky enough that they can work on whatever they want - either because their interests happen to align with what's currently in demand by the market (as in my case) or because they were lucky enough to be born to rich parents or win the startup lottery. But take a step back and look outside of that world. Consider, for example, the many people working as cashiers or cleaners. Do you really think that all or even most of them work those jobs because that's what they genuinely want to do, given a choice? It seems much more likely that the main reason why most of them work in those jobs is that they have to make ends meet somehow, and those are the kinds of jobs available to them. As for the more on-topic part... Why do you assume that those intelligent people would not engage in some other little value add activity that can make them a lot of money. I don't. There may be other talent-wasting sectors in the economy (and I guess you always get some geniuses spending their time on whatever the equivalent of card counting of the day is). I have simply pointed out that HFT is one of them (and I do believe that finance in general is the worst offender at this time). [1] If you intended to imply the quantifier "some people", I apologize for my misinterpretation - though in that case, I would wonder what the point of the statement was. Certainly it doesn't help paint capitalism in a positive light, because every economic system allows some people to work on whatever they want, while the rest tend to have the same superficial choice of job that they do in capitalism. (E.g., you were not simply assigned a job in communism either.)
  - raverbashing 13y ago
    Yes So HFT should expect to be manipulated by false news. I bet they won't be to happy when that happens.
    - jussij 13y ago
      > I bet they won't be to happy when that happens. I suspect they don't give too much of a toss. Firstly, the people who run/own those markets make money on every trade (i.e. ever buy/sell) so they'll make money if the market is going up or down. Secondly those manipulating the market will be in the know so they'll be in a position to take money away from those people/organisations that are on the outside. You only have to go back to 2007 to the GFC to see how easy it is for impotent governments and greedy bankers to screw the world. Do you think any of those corrupt GFC bankers are suffering now?
m0th87 13y ago
I don't see any comments here critiquing HFT simply because it's complicated. Rather, they seem related to whether it's actually a net-positive for society.
- crdoconnor 13y ago
  Every description of an HFT algo seems to fall into one of three categories: * Acting on public information, milliseconds before anybody else - which helps everybody else about as much as insider trading does. * Acting on trading information gleaned from "bid stuffing" (making and canceling orders really quickly) - which helps everybody else about as much as front running does. * Detecting the presence of large trades about to go through or going through and capitalizing on the price movements they cause - i.e. imposing a tax others making large trades in the stock market. In return, they flood the market with liquidity when it is least needed and withdraw it suddenly when it is (e.g. when prices are diving). There's literally nothing to like about HFT.
  - rgarcia 13y ago
    Acting on public information, milliseconds before anybody else - which helps everybody else about as much as insider trading does. "They can do it faster, therefore it must be illegal." Acting on trading information gleaned from "bid stuffing" (making and canceling orders really quickly) - which helps everybody else about as much as front running does. The only people that notice this behavior are...other people capable of doing this behavior. Why should it matter to you, the long-term investor, the trading tactics computers employ at the millisecond scale? Detecting the presence of large trades about to go through or going through and capitalizing on the price movements they cause - i.e. imposing a tax others making large trades in the stock market This happens in any market at any timescale. Everyone capitalizes on trends.
    - CJefferson 13y ago
      You are replying to the wrong points.The question is not are these things illegal, or does everyone do them. question is, do they benefit the market as a whole? Traders do not have a right to perform HFT, and if it destabilise markets, we can take steps to reduce it (of course, there is then the issue of how to take steps without causing different problems)

by minimax 13y ago

jussij 13y ago

> but claiming that we are using computers to do things better than we did 10 years ago is a bad thing But they are not using those computer to do something better, they are using those computers to do something that was impossible 10 years ago. The problem I have with HST is what purpose does it serve, other than offer another way to gamble on stock price movements. Now there is nothing new about gambling on stock price movements but with HST it takes the control out of the market and puts it into the hands of a bunch of computer programs. And to say that can't cause problems, you have to look no further than the hoax bomb at the white house tweet that wiped out $130 billion in market value in the matter of seconds. Without those HST computers system all trying to out do each other, that event would not have been so dramatic.

Rangi42 13y ago
If you can trade faster, the market can react to information faster. Stocks dropped almost as soon as the tweet was released, without needing to wait for a few major news channels -- and recovered in five minutes after people stopped panicking.[1] [1] http://21stcenturywire.com/2013/04/24/white-house-attacked-obama-injured-ap-tweet-hoax-crashes-us-stock-market/ http://21stcenturywire.com/2013/04/24/white-house-attacked-o...
- jussij 13y ago
  So by making the system trade faster, they have made the market less stable and opened it up to outside manipulation. Hardly what you call progress.
  - marshray 13y ago
    Outside "manipulation" has always been a force in markets. Perhaps HFT is making the system faster to recover to false information? Or maybe it's just another zero-sum scheme for moving money from the rich to the very rich. Heck I dunno.
- nhaehnle 13y ago
  The question is: Does fast trading provide a net positive to society? Real investment decisions - as in, decisions of which factories to build, which products to develop, who to hire, and so on - are made on a time-scale of weeks or months. Having the stock market react on a sub-second time scale certainly has no effect at all on those decisions. To gain some perspective, consider if trading operated on an hourly-auction type system. The stock price would react slower and in a different manner that it does today, and that could change the income distribution among traders. But honestly, why should anyone care? When it comes down to it, there is no upside to trades going that fast to anyone outside of the myopic circle of professional traders. Even those professional traders only have an upside as long as they participate in a vicious arms race. However, there are downsides. One downside that many people argue is that the resulting distribution of income is not just, because HST firms suck a revenue stream out of the economy without building anything real. The more important downside (in my opinion) is that HST sucks intelligent people away from sectors of the economy where they would positively contribute by developing and improving directly useful technology.
  - vasyainv 13y ago
    Why do you assume that those intelligent people would not engage in some other little value add activity that can make them a lot of money. How much value add do most web social startups provide? The main feature of capitalist economy is that it allows people to work on whatever they want and not on something that some higher authority deems to be "useful"
    - rayiner 13y ago
      There is no money in doing really useful things. As long as that's true, lots of smart people will instead find debatably somewhat useful things to do that pay more money.
    - nhaehnle 13y ago
      The main feature of capitalist economy is that it allows people to work on whatever they want Completely off-topic to the original discussion, but assuming that you intended to imply the quantifier that I think you implicitly intended to imply - i.e., "all people", or even "most people" - you must be living in a completely different world and/or a very cushy bubble. [1] I expect many people on this site are lucky enough that they can work on whatever they want - either because their interests happen to align with what's currently in demand by the market (as in my case) or because they were lucky enough to be born to rich parents or win the startup lottery. But take a step back and look outside of that world. Consider, for example, the many people working as cashiers or cleaners. Do you really think that all or even most of them work those jobs because that's what they genuinely want to do, given a choice? It seems much more likely that the main reason why most of them work in those jobs is that they have to make ends meet somehow, and those are the kinds of jobs available to them. As for the more on-topic part... Why do you assume that those intelligent people would not engage in some other little value add activity that can make them a lot of money. I don't. There may be other talent-wasting sectors in the economy (and I guess you always get some geniuses spending their time on whatever the equivalent of card counting of the day is). I have simply pointed out that HFT is one of them (and I do believe that finance in general is the worst offender at this time). [1] If you intended to imply the quantifier "some people", I apologize for my misinterpretation - though in that case, I would wonder what the point of the statement was. Certainly it doesn't help paint capitalism in a positive light, because every economic system allows some people to work on whatever they want, while the rest tend to have the same superficial choice of job that they do in capitalism. (E.g., you were not simply assigned a job in communism either.)
- raverbashing 13y ago
  Yes So HFT should expect to be manipulated by false news. I bet they won't be to happy when that happens.
  - jussij 13y ago
    > I bet they won't be to happy when that happens. I suspect they don't give too much of a toss. Firstly, the people who run/own those markets make money on every trade (i.e. ever buy/sell) so they'll make money if the market is going up or down. Secondly those manipulating the market will be in the know so they'll be in a position to take money away from those people/organisations that are on the outside. You only have to go back to 2007 to the GFC to see how easy it is for impotent governments and greedy bankers to screw the world. Do you think any of those corrupt GFC bankers are suffering now?

m0th87 13y ago

I don't see any comments here critiquing HFT simply because it's complicated. Rather, they seem related to whether it's actually a net-positive for society.

crdoconnor 13y ago
Every description of an HFT algo seems to fall into one of three categories: * Acting on public information, milliseconds before anybody else - which helps everybody else about as much as insider trading does. * Acting on trading information gleaned from "bid stuffing" (making and canceling orders really quickly) - which helps everybody else about as much as front running does. * Detecting the presence of large trades about to go through or going through and capitalizing on the price movements they cause - i.e. imposing a tax others making large trades in the stock market. In return, they flood the market with liquidity when it is least needed and withdraw it suddenly when it is (e.g. when prices are diving). There's literally nothing to like about HFT.
- rgarcia 13y ago
  Acting on public information, milliseconds before anybody else - which helps everybody else about as much as insider trading does. "They can do it faster, therefore it must be illegal." Acting on trading information gleaned from "bid stuffing" (making and canceling orders really quickly) - which helps everybody else about as much as front running does. The only people that notice this behavior are...other people capable of doing this behavior. Why should it matter to you, the long-term investor, the trading tactics computers employ at the millisecond scale? Detecting the presence of large trades about to go through or going through and capitalizing on the price movements they cause - i.e. imposing a tax others making large trades in the stock market This happens in any market at any timescale. Everyone capitalizes on trends.
  - CJefferson 13y ago
    You are replying to the wrong points.The question is not are these things illegal, or does everyone do them. question is, do they benefit the market as a whole? Traders do not have a right to perform HFT, and if it destabilise markets, we can take steps to reduce it (of course, there is then the issue of how to take steps without causing different problems)