high frequency trading
Thread Starter
Joined: Jul 2002
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From: bolton
high frequency trading
I just saw this over on business insider. http://www.businessinsider.com/high-...g-chart-2012-8
There is a trend in the market called high frequency trading.
These guys aren't "investing" in companies because the feel it will make money due to a great marketing strategy or unique product development.
They are hedging pennies and trading large volumes.
They're holding shares for seconds before flipping them.
I design very complex systems for living. I have more than a passing interest in stability and control loops.
Please trust me when I say this, they're is serious ugly on the horizon.
This is an interesting graph. it's a big gif image it scrolls through 5 years of trading.
The horizontal scale is the time of day and the vertical scale is the number of trades by each exchange.
It starts in '07 and you can see a baseline of a human driven level of trading.
As time progresses, you see the encroachment of machine driven trades.
Pay attention as the volume increases along with the momentary huge spikes.
There is a trend in the market called high frequency trading.
These guys aren't "investing" in companies because the feel it will make money due to a great marketing strategy or unique product development.
They are hedging pennies and trading large volumes.
They're holding shares for seconds before flipping them.
I design very complex systems for living. I have more than a passing interest in stability and control loops.
Please trust me when I say this, they're is serious ugly on the horizon.
This is an interesting graph. it's a big gif image it scrolls through 5 years of trading.
The horizontal scale is the time of day and the vertical scale is the number of trades by each exchange.
It starts in '07 and you can see a baseline of a human driven level of trading.
As time progresses, you see the encroachment of machine driven trades.
Pay attention as the volume increases along with the momentary huge spikes.
Joined: Jan 2001
Posts: 45,702
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From: Mish-she-gan
That is NUTS! The spikes in the past two years are insane.
This statement alone should make everyone nervous. "By 2010, High Frequency Trading is accounting for over 70% of equity trades taking place in the US, and is rapidly growing in popularity in Europe and Asia."
This statement alone should make everyone nervous. "By 2010, High Frequency Trading is accounting for over 70% of equity trades taking place in the US, and is rapidly growing in popularity in Europe and Asia."
Thread Starter
Joined: Jul 2002
Posts: 37,311
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From: bolton
Having spent a great part of my career involved in real time supercomputing I have former peers heavily into this market space.
I still think it's a parasitic drain on the market at the same time it creates instability and will blow up in the not to distant future.
I still think it's a parasitic drain on the market at the same time it creates instability and will blow up in the not to distant future.
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Joined: Nov 2001
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From: Delaware, OH
We just need an environment where they go down the toilet if they guess wrong; none of this "I borrowed the money, I spent the money, but I shouldn't have to bear the downside if it goes wrong."
I like to watch "Shark Tank" and he's on it. Didn't know much about him, otherwise.