So I met a guy who makes Algorithmic Trading Programs for High Frequency Trading - page 2.

crispy

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Quote from: hugolp on August 01, 2011, 04:46:57 AM

...the present monetary and financial system is the opposite to a free market money system. We live under a government money monopolly, which is the opposite extreme.

If you think it's a "free market" system, then just try to open your own stock exchange or bank, or IPO your own stock on Ebay or Craigslist!

And yes, I'm aware of GLBSE.com. How long do you think they'd last if they accepted currencies other than BTC?

hugolp

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Quote from: Murwa on August 01, 2011, 03:57:00 AM

So what you saying is that for example JP MORGAN selling silver naked short is a peaceful cooperation and its is not distortion of price of any kind ?? Shocked

Ok, back to basics again. As a friendly advise let me tell you that if you try you will see that reading some books is more effective than posting a lot of emoticons.

The banking system in most developed economies is an oligopoly around the government created money monopolly. The banks receive several privileges on the issuances of currency from the government and this regulations that the government grants to the banks are imposed through violence or thread of violence. The way the banking system is regulated is far more complicated, but this is a start.

Btw, Im not claiming that anything represents a incredible distorsion of the free market. During history there has been some periods with some mild regulations but they were close to a free system. But the present monetary and financial system is the opposite to a free market money system. We live under a government money monopolly, which is the opposite extreme.

Quote

Well i responded to someone who claimed that HFT is not a free market.

You were answering to me and misrepresented what I was saying. Its all there so go back and check.

Murwa

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Quote from: hugolp on July 31, 2011, 11:30:52 AM

Sorry, I though I was talking with someone who knows the basics. Let me explain:

If you make a voluntary choice, that is not using violence or thread of violence, you are not distorting the singals. You are peacefully cooperating.

If you foce people to make some decisions or deprive them of options using violence or thread of violence then you are distorting the signals in the market because people is not choosing according to their needs but forced.

So what you saying is that for example JP MORGAN selling silver naked short is a peaceful cooperation and its is not distortion of price of any kind ?? Shocked

Quote from: hugolp on July 31, 2011, 11:30:52 AM

EDIT: And let me clarify again because I think you did not get it. I did not say HFT is not free market. What I said is the way is used today and in general the state of the whole financial system is not a free market outcome, but an outcome of the progressive/conservative policies.

Well i responded to someone who claimed that HFT is not a free market.

hugolp

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Quote from: Murwa on July 31, 2011, 06:48:01 AM

Quote from: hugolp on July 30, 2011, 06:09:24 PM

Second, the free market works because of the price signals represent the real choices of the people. When you distort those signals the outcome is not a free market outcome, even when apparently were done "freely" by someone.

According to your own logic, free market can never happen because "freedom" gives ability to distort signal those signals ( for example speculation in general or HFT in particular ) or many more .

Sorry, I though I was talking with someone who knows the basics. Let me explain:

If you make a voluntary choice, that is not using violence or thread of violence, you are not distorting the singals. You are peacefully cooperating.

If you foce people to make some decisions or deprive them of options using violence or thread of violence then you are distorting the signals in the market because people is not choosing according to their needs but forced.

Now try again.

EDIT: And let me clarify again because I think you did not get it. I did not say HFT is not free market. What I said is the way is used today and in general the state of the whole financial system is not a free market outcome, but an outcome of the progressive/conservative policies.

LightRider

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I advocate the Zeitgeist Movement & Venus Project.

http://youtu.be/TDaFwnOiKVE

MatthewLM

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Quote from: Murwa on July 31, 2011, 06:48:01 AM

Quote from: hugolp on July 30, 2011, 06:09:24 PM

Second, the free market works because of the price signals represent the real choices of the people. When you distort those signals the outcome is not a free market outcome, even when apparently were done "freely" by someone.

According to your own logic, free market can never happen because "freedom" gives ability to distort signal those signals ( for example speculation in general or HFT in particular ) or many more .

Who would want to waste their money distorting prices? High frequency trading algorithms make money buying low and sell high (Or going long low and short high) just like any other trading. Human traders help long term prices buy holding positions in investments which they believe are undervalued for the future. High frequency trading works upon the short term noise.

cbeast

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Let's talk governance, lipstick, and pigs.

Quote from: Murwa on July 30, 2011, 05:52:19 PM

Quote from: hugolp on July 30, 2011, 04:07:43 AM

Quote from: niemivh on July 29, 2011, 04:06:20 PM

Enjoy your 'free market'.

Nice strawman.

Enjoy the progresive Federal Reserve.

The progressive and conservative policies have taken us down this path, and you still have the audacity of blaming it on non-existing free markets? Do you have any kind of honesty limits or morals?

How freedom to trade with whatever techniques you want is not a "free market" policy ?

Reality sometimes is painful and i understand you may have some difficult time to adjust.

It depends on the techniques you choose. Idealism doesn't make good policy in the real world. Ideologues rarely see beyond their bias and the repercussions of their actions. For instance, there comes a point in every civilization where trading with gold becomes trading with lead. At one point lead becomes more valuable than gold when your magazine is reaching empty and you are no longer thinking about your portfolio. The freedom to be greedy and wasteful is paid for by the blood of our forefathers and it is very disrespectful to abuse that freedom. Ideologues write interesting books, but make terrible policies.

Murwa

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Quote from: hugolp on July 30, 2011, 06:09:24 PM

Second, the free market works because of the price signals represent the real choices of the people. When you distort those signals the outcome is not a free market outcome, even when apparently were done "freely" by someone.

According to your own logic, free market can never happen because "freedom" gives ability to distort signal those signals ( for example speculation in general or HFT in particular ) or many more .

Quote from: hugolp on July 30, 2011, 06:09:24 PM

Its a constant in history that when a inflationary period starts it develops a financial boom and fostering reckless speculation. The financial system in the western countries is completely out of control and hypertrofiated, and that is thanks to the progressive policies. You would not be seeing the crazyness or inequalities you see around in a free market.

As you pointed out free market can never happen.

Quote from: hugolp on July 30, 2011, 06:09:24 PM

I have already said that I dont have anything against HFT and the problems I see. I dont believe what the op is saying and he has demonstrated quite a few time that he has not much idea about economics and likes to go over the top. I know someone dedicated to HFT and he is not doing by far that kind of money. It could be that it just happens that the guy I know is very bad at his job I guess.

Still my question has not been answered

How freedom to trade with whatever techniques you want is not a "free market" policy ?

hugolp

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Quote from: Murwa on July 30, 2011, 05:52:19 PM

How freedom to trade with whatever techniques you want is not a "free market" policy ?

Reality sometimes is painful and i understand you may have some difficult time to adjust.

First, we dont need your condescending tone here. Try speaking like a normal person.

Second, the free market works because of the price signals represent the real choices of the people. When you distort those signals the outcome is not a free market outcome, even when apparently were done "freely" by someone. Its a constant in history that when a inflationary period starts it develops a financial boom and fostering reckless speculation. The financial system in the western countries is completely out of control and hypertrofiated, and that is thanks to the progressive policies. You would not be seeing the crazyness or inequalities you see around in a free market.

I have already said that I dont have anything against HFT and the problems I see. I dont believe what the op is saying and he has demonstrated quite a few time that he has not much idea about economics and likes to go over the top. I know someone dedicated to HFT and he is not doing by far that kind of money. It could be that it just happens that the guy I know is very bad at his job I guess.

Murwa

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Quote from: hugolp on July 30, 2011, 04:07:43 AM

Quote from: niemivh on July 29, 2011, 04:06:20 PM

Enjoy your 'free market'.

Nice strawman.

Enjoy the progresive Federal Reserve.

The progressive and conservative policies have taken us down this path, and you still have the audacity of blaming it on non-existing free markets? Do you have any kind of honesty limits or morals?

How freedom to trade with whatever techniques you want is not a "free market" policy ?

Reality sometimes is painful and i understand you may have some difficult time to adjust.

MatthewLM

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There are a few different platforms for algorithmic trading. Some use their proprietary programming languages and libraries and others use APIs. I don't know much about them but google will help. :-P

wallet.dat

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How do HFTs work? What do they pay for a transaction? I was thinking of writing my own bot to use with my Ameritrade account, but there's probably better tools to do this with.

kiba

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Let face it, there will be an exchange that allow bots even if all the other exchanges will not. Bitcoin economy is a free market.

MatthewLM

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If bots make more volatility rather than reduce it, them overall they lose money.

hugolp

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Quote from: wumpus on July 30, 2011, 05:57:12 AM

Quote from: MatthewLM on July 29, 2011, 05:25:15 PM

I don't think he knows very much about markets then. As people make money from price changes, prices are smoothed out and reflect longer term pictures (HFT is short term however, longer term is for usual human investment).

I don't think you can say anything about the effect in general. For the individual trading bot it depends on the algorithm and strategy. It can stabilize the price, but it can also cause instability (for example - fake a trend) and profit from that. And as there's zillion bots active all competing and reacting to each other, the overall emergent effect is hard to quantify. It's like trying to determine what you brain will do from studying one neuron.

Yep.

The real problem with bot trading is that the stock markets are willing to undo trades when a bot goes crazy. This way the bot owners have no incentive to make the bots better. If they lost big time everytime a bot goes crazy, they would think twice about using a bot or if the did, they would do it more carefully.

wumpus

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No Maps for These Territories

Quote from: MatthewLM on July 29, 2011, 05:25:15 PM

I don't think he knows very much about markets then. As people make money from price changes, prices are smoothed out and reflect longer term pictures (HFT is short term however, longer term is for usual human investment).

I don't think you can say anything about the effect in general. For the individual trading bot it depends on the algorithm and strategy. It can stabilize the price, but it can also cause instability (for example - fake a trend) and profit from that. And as there's zillion bots active all competing and reacting to each other, the overall emergent effect is hard to quantify. It's like trying to determine what you brain will do from studying one neuron.

cunicula

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Quote from: Palmdetroit on July 30, 2011, 02:38:33 AM

Over 90% of all trades are algos.. only way to win is to not play. as far as 'who's money is it' .. its yours..if you are wise enough to not directly invest, all those taxes you pay into public servant pensions gets pennied every millisecond and you pay the bill.

Check out "stop loss killa algo" here.. this is natural gas.... so you pay there as well

To give a simplified example, many institutional investors follow explicit divisions of their portfolio (say 60% stocks 40% bonds). They follow these rules to keep the risk-reward profile of their portfolio approximately constant. If bonds go up in value, the institutional investor will have to rebalance their portfolio (sell some bonds, buy some stocks). The purpose of the algorithm and massive computing power is to predict the automated responses of these investors. If you can get in and buy the stocks a millisecond before the pension fund does, then you can profit by reselling the stock to the pension fund for at a tiny mark up. The pension fund pays slightly more for the asset than it would have if it had a faster computer.

I would be very happy with a block chain that raised revenue for maintenance purposes using a 0.1% tax on all transactions rather than by printing money like bitcoin. Is that what you are after?

hugolp

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Quote from: niemivh on July 29, 2011, 04:06:20 PM

Enjoy your 'free market'.

Nice strawman.

Enjoy the progresive Federal Reserve.

The progressive and conservative policies have taken us down this path, and you still have the audacity of blaming it on non-existing free markets? Do you have any kind of honesty limits or morals?

Palmdetroit

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PHS 50% PoS - Stop mining start minting

Over 90% of all trades are algos.. only way to win is to not play. as far as 'who's money is it' .. its yours..if you are wise enough to not directly invest, all those taxes you pay into public servant pensions gets pennied every millisecond and you pay the bill.

Check out "stop loss killa algo" here.. this is natural gas.... so you pay there as well

tvbcof

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Quote from: niemivh on July 29, 2011, 04:06:20 PM

...
The average ratio of dollar-earned-to-dollar-lost is about 6-to-1, meaning that every 6 dollars they make they lose 1
He was working on an algorithm that was getting 30-to-1 and 40-to-1 ratios
He called the whole line of business a 'printing press'
...

Some things are not really jiving with other things I've run across (many of which may be wrong or overstated.)

I've heard that somewhere over half of the trades nowadays are algorithmic. After a decade of going nowhere but backward, many flesh and blood people are exiting the game.

So, if 50% are high-speed algorithm trades and they have win rates of the numbers your friend claims, where's the money coming from?

Here is a hypothesis of mine which I believe is completely my own (vs. just thinking I invented it after reading or hearing it somewhere else):

What if the high-speed juggling act is a mechanism to deal with 'naked shorts' (aka 'strategic failures to deliver'.) That would be paper which purposely was sold short and never borrowed. Depending on who you listen to, the number of certs in that category is alarmingly large, and there is no way to determine if the shares in ones brokerage account are real or IOU's. I hypothesis that keeping a large number of shares in motion helps avoid pesky reporting rules. And the 'cops' are doing everything possible to avoid looking anyway.

Topic: So I met a guy who makes Algorithmic Trading Programs for High Frequency Trading - page 2. (Read 7298 times)