Re: <nettime> The secret financial market only robots can see

[Brian Holmes <bhcontinentaldrift@gmail.com>]

On 09/23/2013 01:46 AM, nettime's avid reader wrote:

> The researchers say there’s much more to learn, especially at the border
> where human traders and robotic ones interact. One question is whether
> moving at computer speeds is inefficient because there’s less
> information available at that time scale—data just can’t move that fast,
> even electronically. Laboratory experiments suggest computers are more
> efficient on a human time-scale than a sub-second one. And if sub-second
> trading does continue, do market participants need to come up with
> sub-second hedges and derivatives to protect from this kind volatility?

The question is poorly framed because the authors don't ask: Efficient 
for what? Or even better: What kind of society do we get when profit is 
produced - and economic activity is governed - by agents operating 
outside the perceptual and intellectual grasp of well over 99% of the 
people? Robomarkets then become an advanced case of what has been 
happening since the mathematization and computerization of finance began 
in the 1980s.

I read the scientific text to which the journalistic article refers. 
It's a confirmation of what's already known. The principle of automated 
trading strategies is to provoke microvolatilities and cash in on them. 
Yet those strategies only work well when the markets are already 
volatile, as they were from 2007 onward. Since 2011 (which is outside 
the timeframe of the article), volatility has gone down while 
competition between the high-speed "algo-traders" has gone up. And now 
the regulators are moving in:

http://tinyurl.com/how-the-robots-lost

In my view, high-speed trading is not the invisible harbinger of a 
future apocalypse. It's just one more symptom of the actual apocalypse.

best, Brian



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