I like a good panic, but I can't get worked up with fear: <after discussions with a number of insiders I am inclined to be much more supportive. HFT has driven the average hold time for some symbols to less than a minute - one symbol was so highly traded its average hold time was down to 17 seconds.
I cannot find any published reports on this, but it is indeed scary. >
If somebody has a cheap broker and they can do trades at a million miles a minute, I don't see why I have to worry about it.
I come trundling along at 4 km per hour, plonk my order on the table and some million mile a minute computers grab it and race around the block fifty times buying and selling then a minute or two later, my order is filled as requested at the price I specify. Or I have to wait until my price is reached while the computers all roar around clearing the market flat out before grabbing my order.
How do I get hurt other than missing out on the market clearing action of the swarms of orders which is not what I'm trying to do. That's what I pay them to do - wade through all the orders and fill them all flat out.
I'm happy that they do it really quickly and effectively.
Regarding the Flash Crash, that was obviously a bunch of computer programmes fighting each other, playing chicken, seeing who was best able to place bets correctly, which computers had the best mathematicians and the best programmers and the best financiers backing them.
It was no skin off my nose. On the contrary, it was an opportunity. If I had been wanting to buy one of the Flash Crash stocks, I'd have been happy to buy from one of those million mile a minute computers.
My plan was to put in some low priced orders and hope for another duel to the death between some million mile a minute computers. But the officials who were bewildered by the whole thing and apparently can't understand why the Flash Crash happens cancel trades arbitrarily so they would rob me after the fact.
Therefore I have to not put in my low-priced buy orders so, as usual, the dopey government people mess things up by making the thing they are trying to prevent even worse. The computers will have to go even lower to find somebody willing to place bets against not just the million mile a minute computers but the people who want to stop people buying and selling at market prices, canceling trades arbitrarily and handing profits to those who can figure out what the authorities will do or have friends in the right places who will not cancel their particular trades.
The problem is the authorities worried about Flash Crashes, not the million mile a minute computers.
Why should I worry about the million mile a minute computers, sitting right beside the trading "desk" for limited latency? Why is it scary?
Mqurice |
