OT: Fascinating Article on High Frequency Bot Trading

Computer measures, counter measures, and counter-counter measures in the markets. These guys would make most military electronic warfare
suite programers envious.
http://www.theatlantic.com/science/archive/2010/08/market-data-firm-spots-the-tracks-of-bizarre-robot-traders/60829 /
And all this Tom Foolery will likely cause the system to crap out one day. Dave
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snipped-for-privacy@nowhere.invalid wrote:

http://www.theatlantic.com/science/archive/2010/08/market-data-firm-spots-the-tracks-of-bizarre-robot-traders/60829 /
You mean like this?
http://www.kitco.com/images/live/gold.gif
    
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Richard Lamb



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wrote:

No. Go to the link and read the article. Also, read the discussion of the various posters on that forum that follows the article. There is some very unusual stuff going on there. Dave
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snipped-for-privacy@nowhere.invalid wrote:

Wow.
That's just down right weird.
Almost like an adaptive program (neural net?) in the early learning stages.         
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Richard Lamb



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wrote:

Over 70% of the trading has become computer generated. The market is almost on computer remote control with the market makers merely skimming profits via superior market timing techniques using sophisticated mathematical algorithms. The little guy doesn't stand a chance in conditions like these.
Whatever these "blips" are that are alluded to in the original article, well who knows. Maybe they are testing the nuclear trigger that will set off the derivatives bomb. Dave    
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I am of the opposite opinion, that a wildly trading market with prices out of whack, is heaven for a value investor.
i
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On Tue, 10 Aug 2010 06:15:15 -0500, Ignoramus27168

========It was wisely and correctly observed that the market can remain irrational far longer than you can remain solvent...
An additional problem for the value investor is that the books corporate, non-profit, and governmental are now cooked [crooked?] to the extent that even the CEO/CFO by their own admission don't know what is going on. In too many cases, the value of assets are wildly overstated and liabilities grossly minimized, particularly those involving derivatives.
-- Unka George (George McDuffee) .............................. The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953).
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This applies to short sellers, margin investors, and other such people. It does not apply to people who are not financially stretched.

This is why buyer discretion is advised. All those cases can be usually weeded out.
i
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On Tue, 10 Aug 2010 08:55:31 -0500, Ignoramus27168

Actually, if you follow some of the links from the original story and the links supplied in the discussion that followed it, there are some details about how most investors, whom are not wired into the system to take advantage of market changes by the microsecond, are being screwed by the High Frequency Trading (HFT) systems.
The big market makers are getting your trading info before execution of your orders and front running on that info, thereby raising your share price on order execution by a penny or two or a nickle. This may not sound like much, but they do it for hundreds of millions of shares per day which causes their profits to add up to substantial sums.
Literally, the average investor is being "nickle and dimed" out of billions of dollars.
But I am "absolutely certain" <cough> that the SEC is competent enough, and cares enough, to police this situation up.........because nobody there is being paid off to look the other way......because they sure caught Bernie Madoff "quickly".....er......or maybe we're in a world of s**t. Dave
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On Aug 9, 2:41am, snipped-for-privacy@nowhere.invalid wrote:

That patterning behavior could be a "trap" for another Bot. Once you train the other bots to recognize and/or adapt to the pattern, you can suddenly! exploit them. Also, it could be a variation of denial of services, or noise overload against another bot.
The World is a dangerous place.
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On Tue, 10 Aug 2010 07:59:31 -0700 (PDT), Cross-Slide

Like I said, these guys would make most military electronic warfare suite programers envious. This system seems to be developing along the very same strategies, tactics, and techniques they use. Dave
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