Wow. Was not expecting to watch all of that. Pretty easy to listen to whilst at work instead of watching if you've got headphones. Would recommend. Amazing.

Thanks Flysurfer, that is a great piece of journalism. HFT manipulates the markets with incredible ease but no government is prepared to take on the banks and financial markets to make it illegal. Hell, the governments probably develop their own HFT Algos.

Mark _australia said..

sounds interesting but can't see I will ever click on anything that is 50mins,
summary ?

[play this music in the background: ]

High Frequency Trading

It's basically trading on very small margins because you have a very small advantage for one reason or another. For example your connection to the exchange is in a straighter line than your competitors', so your trade will get there first. Those sort of micro advantages. The speed of light and even the curvature of the earth (en.wikipedia.org/wiki/Great_circle) are important factors.

And the trades might make 0.001c

But if you do it very frequently, like millions of trades a day, or an hour, every day, all day you can make (or lose) serious money.

I don't need to tell you it's all done by computers.

I didn't get to the end. Yes these type of trades can definitely affect markets. They also account for most of the trades that occur. But they only account for an almost negligible portion of the profits. So far.

en.wikipedia.org/wiki/High-frequency_trading

trendy article: www.wired.com/business/2012/08/ff_wallstreet_trading/all/

the big 4 international financial institutions maybe?
they got a finger in everyones pie

Cambodge said..
That's nonsense. Every time somebody sells a peach there's someone else buying it. So, did the price just go up for the next one? or down?

Cam... seriously mate, do you want to think that through, ask a friend or the audience and come back?

You're buying and selling shares, or peaches in this example... people can sell without other people buying it just means the person (company) who produced the shares/peaches get left with them.

Supply and demand.

When Twitter IPO'd the other day... it made available x number of shares... people wanted more (demand) so the price of each share went up... then the buying and selling went heavier on the selling... so there was supply... shares went down.

Simplez.

Maybe this chart will help you...

NotWal said..

That's supply and demand. It's not buy a peach and the price goes up and sell a peach the price goes down ya doofus. :)

It was inferred... what else would cause it?

^ Sure. But if you had no system whatsoever patterns of order eventually create themselves. Whether that be the strongest in the group taking power, or the smartest, or both, or even a larger collection of the weakest and/or dumbest taking power.

Some form of order will always come out of chaos/power vacuum.

Someone or something will always be in power. Do you want that to be an elected government, a King, an army, a corporation... what?

Cambodge said..

FlySurfer said..

...every time somebody buys a peach the next costs more...
...every time you sell it goes down for the next...

That's nonsense. Every time somebody sells a peach there's someone else buying it. So, did the price just go up for the next one? or down?

Peaches come in a can, they were put there by a man...
Everyone knows that.