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There's an incredible difference between a trading strategy and an investing strategy. If you are on an investment timescale then really you should care less a

by fleitz 13y ago

There's an incredible difference between a trading strategy and an investing strategy. If you are on an investment timescale then really you should care less about HFT and trading. What is the brain if not an 'algo'? Most of the people who complain about 'algo' are traders who are now obsolete, because computers can perform their 'technical analysis' faster and with less emotion, than a human can. They claim they offer 'intelligence' but don't offer much evidence that they actually do so.

joezydeco 13y ago
If my investment strategy is "buy stocks and pray that some random HFT fuckup in the next 40 years doesn't wipe out my entire life's savings along with everyone else's", then the evidence is growing year by year that this strategy is going to be a losing one.
- minimax 13y ago
  You must have missed the part where the NASDAQ bug caused about $60MM in losses whereas the subsequent price decline has destroyed $40B in market capitalization. You can lose your shirt in the stock market, but that's been true since long before we started using computers to trade equities.
  - joezydeco 13y ago
    No, I fully caught that part. I also understood why the NASDAQ computers couldn't finish the cross: because HFT computers were hammering the NASDAQ with cancel orders. You don't DDOS a server and say "oh, the server has a bug." And, to be perfectly honest, I have no sympathy for anyone that lost money on the FB IPO. For once a company executed an IPO and got every cent on the table. And I know that just infuriates every suit on Wall Street to no end, which couldn't make me any happier.
    - mooktrader 13y ago
      Although HFT and other algorithmic traders are certainly prevalent in the markets and probably in this IPO, I think this flaw was elicited because of the unprecedented and overwhelming amount of non-professional human order flow. There was a ton of buzz and participation in this IPO. The uncertainty around the opening process compounded the problem.
    - Dylan16807 13y ago
      There was a bug. A bug serious enough that you could trigger it with low frequency trades. Every time the cross algorithm restarted it did so using data that was 99% stale. This meant it didn't just need to find a few milliseconds of stability, it had to wait until the average order rate went low enough and stayed there for minutes. A relative handful of people changing their orders a few times a minute would be enough to keep such an O(n^2) algorithm occupied.

by fleitz 13y ago

joezydeco 13y ago

If my investment strategy is "buy stocks and pray that some random HFT fuckup in the next 40 years doesn't wipe out my entire life's savings along with everyone else's", then the evidence is growing year by year that this strategy is going to be a losing one.

minimax 13y ago
You must have missed the part where the NASDAQ bug caused about $60MM in losses whereas the subsequent price decline has destroyed $40B in market capitalization. You can lose your shirt in the stock market, but that's been true since long before we started using computers to trade equities.
- joezydeco 13y ago
  No, I fully caught that part. I also understood why the NASDAQ computers couldn't finish the cross: because HFT computers were hammering the NASDAQ with cancel orders. You don't DDOS a server and say "oh, the server has a bug." And, to be perfectly honest, I have no sympathy for anyone that lost money on the FB IPO. For once a company executed an IPO and got every cent on the table. And I know that just infuriates every suit on Wall Street to no end, which couldn't make me any happier.
  - mooktrader 13y ago
    Although HFT and other algorithmic traders are certainly prevalent in the markets and probably in this IPO, I think this flaw was elicited because of the unprecedented and overwhelming amount of non-professional human order flow. There was a ton of buzz and participation in this IPO. The uncertainty around the opening process compounded the problem.
  - Dylan16807 13y ago
    There was a bug. A bug serious enough that you could trigger it with low frequency trades. Every time the cross algorithm restarted it did so using data that was 99% stale. This meant it didn't just need to find a few milliseconds of stability, it had to wait until the average order rate went low enough and stayed there for minutes. A relative handful of people changing their orders a few times a minute would be enough to keep such an O(n^2) algorithm occupied.