4 ms·
>What does this even mean? "Eventually the pool runs out of water". What? Well, when you have a pool, and water is constantly being sucked out of it, even a ti
by downandout 12y ago
>What does this even mean? "Eventually the pool runs out of water". What?
Well, when you have a pool, and water is constantly being sucked out of it, even a tiny bit at a time, eventually you will have no water left in the pool. Not a hard concept.
- kasey_junk 12y agoBut your analogy is backwards. HFT (of the market making variety) are putting water into the pool, not taking it out.
- downandout 12y agoIt's not backwards. Market making HFT's are like a casino's bankroll. The only purpose that their bankroll serves is to suck money out of the pool.
- kasey_junk 12y agoWell, let me say it's not backwards, it is just nonsensical. Market making HFTs don't have any built in mathematical edge like a roulette wheel. Further, they lower the cost of trading, they add money into the pool in the form of the risks they take and the infrastructure they create. As I look around the markets, I don't see a lot of participants that are there to lose money. The ability to make a profit from market activities is central to a correctly working market.
- industriousthou 12y agoI'm pretty sure he was asking how that concept applies to financial markets.