you didn't follow the reasoning. <g>
You are correct there. I did not see any real reasoning in your argument, unless you meant “reasoning” in the marketing and sales sense. I don’t accept logic by analogy.
Aqueducts worked well without equations to define Reynolds Number.
Yes, aqueducts work without theories. I’m sure there was a trial and error process in building aqueducts. Upon reflection, I now think you don’t know the difference between a theory and an observation. Someone can observe that smoothly flowing water can suddenly switch to a more turbulent flow, but unless they have an equation, they don’t have a theory.
Roman aqueduct engineer says…
Yes, the Roman engineer made some good observations on water flow.
Then a mathematician invents maths to describe the process via Reynolds Number. That was millennia later in 1851. George Stokes
Yes, Stokes discovered the theory for turbulent flow. Do you see the difference?
I have not come up with an equation to define Financial Relativity Theory Reynolds numbers.
I am not surprised by this. You have many observations, but the problem is that you can’t determine the consistency of these observations without having a (real) theory to test them against.
You probably agree that sometimes things go awry and prices fall, loans are canceled, hoarding happens, buying stops, manufacturing stops, markets clear, bankruptcies ensue, lawsuits begin. There is financial turbulence and economic activity slows, sometimes, dramatically, and even goes into fighting and all out war.
Yes, but this does not support your assertion that flash crashes and longer term crashes are the same. There is nothing in these statements that support anything other than markets can be significantly disrupted. How about you make a theory about the proper balance in regulating markets?
But let's not get side-tracked from the Flash Crash which was the actual subject.
That’s funny; no, let’s not. However, that is what I see you doing in 90% or more of your replies.
I don't believe you have not read about what caused the flash crashes other than from me, but maybe somebody else has identified that it's not "market upheaval" or systems failure or being close to the trading centres which causes the flash crashes.
Here, you are also correct that I didn’t following your “reasoning” and/or possible assertions.
You have a double negative about me reading about flash crashes. Are you saying that I only read about flash crashes from you? If so, you’re 100% wrong. Are you saying that someone discovered that flash crashes are not caused by HFT and how their trading system is set up? I doubt that’s true, but send a URL and I’ll read through the evidence.
A flash crash is not a sudden fall. (edit: by definition, it is) It's the fall followed by an equivalent rise. No, not always. Some of the stop-loss orders may not be given back.
The fast flash crashes are liquidity tests and games of chicken held between competing computers. But they are also testing human responses and humans can panic and sell within a couple of minutes. The longer "flash" crashes are not just testing trader responses but seeing if there are concatenating margin-calls which can pile up and crash, for example, a Lehman Brothers, which happened.
So now we have “fast flash crashes” which you will contrast with the “slow flash crashes?” I see only more bald assertions here. OK, my turn: flash crashes are inherent signs of instability by HFT algorithms and provide no public service. They represent the selling of, once private, order information from brokerage houses. They front-run market information which would be illegal for a human entity to trade with. There should be a fee associated with every order entered into the market that is large enough to discourage HFT, but small enough to be absorbed by smaller traders. I assert that this will minimize or eliminate flash crashes.
there are concatenating margin-calls which can pile up and crash, for example, a Lehman Brothers, which happened.
Wow, I’m glad someone here on SI was paying attention to the Lehman Brothers collapse. |
