Thursday, September 26, 2013

 

The Mystery Of $600 Million Traded In The Blink Of An Eye

If there are only computers left, what 'mispricings' will they discover?

"There is a role in [capital] markets for traders whose work is more speculative ... But when taken to its logical extremes, such as computers exploiting five millisecond advantages in the transfer of market-moving information, it's much less clear that society gains anything ... In the high-frequency trading business, billions of dollars are spent on high-speed lines, programming talent, and advanced computers by funds looking to capitalize on the smallest and most fleeting of mispricings. Those are computing resources and insanely intelligent people who could instead be put to work making the Internet run faster for everyone, or figuring out how to distribute electricity more efficiently, or really anything other than trying to figure out how to trade gold futures on the latest Fed announcement faster than the speed of light."

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