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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: Frank A. Coluccio who wrote (31573)	10/5/2009 10:41:00 AM
From: axial	Read Replies (1) \| Respond to of 46821

Thanks for the link, Frank - To be honest, I'm not sure about what should be done about many innovations in trading and finance. For instance, in the last 2 years I've noticed a marked improvement in speed of my trades. Typically, they're now being executed in seconds. The obvious inference is that some of these innovations have been a benefit to the lowly investor. I've been following posts and links from an old site, Nuclear Phynance, which has led to some spirited debate and informed commentary on quant trading by practitioners. Algorithmic trading, derivatives, low-latency trading, dark pools: these are all individual subjects in a pool of relatively new practices, some of which have been facilitated or enabled by technology which is central to telecomms. To illustrate, I just read a rousing rebuttal of claims that quants were responsible, in part, for the market meltdown. Not so, was the response. Taleb notwithstanding, every quant was aware of the limitations in the models, but was directed to use them anyway - by management. OK, fine. But how does that defense solve the problem? On the macro scale, what is the effect of millions of transactions conducted at the speed of light, many seeking to capture similar correlations, and probabilistic divergences? What about systemic risk? There are many questions, some of them involving fairly esoteric trading practices. No one wants to be a Luddite, but there are legitimate questions here. Complexity is no excuse for failure to illuminate, either. If physicists can explain quantum mechanics, then the financial community should be able to describe what it's doing, in language that ordinary people can understand. Jim