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FlyingSpaghettiMonster
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Posted - 2011.08.21 07:10:00 -
[1]
http://www.theatlantic.com/technology/archive/2010/08/market-data-firm-spots-the-tracks-of-bizarre-robot-traders/60829/
Here's the opening bit:
 Quote:
Mysterious and possibly nefarious trading algorithms are operating every minute of every day in the nation's stock exchanges. What they do doesn't show up in Google Finance, let alone in the pages of the Wall Street Journal. No one really knows how they operate or why. But over the past few weeks, Nanex, a data services firm has dragged some of the odder algorithm specimens into the light. The trading bots visualized in the stock charts in this story aren't doing anything that could be construed to help the market. Unknown entities for unknown reasons are sending thousands of orders a second through the electronic stock exchanges with no intent to actually trade. Often, the buy or sell prices that they are offering are so far from the market price that there's no way they'd ever be part of a trade. The bots sketch out odd patterns with their orders, leaving patterns in the data that are largely invisible to market participants. FINANCIAL TECH on THE ATLANTIC Alexis Madrigal: Explaining Bizarre Bot Trader Behavior Joe Flood: How Algorithmic Trading Works Timothy Lavin: Monsters in the Market Alexis Madrigal: Tech and the Flash Crash In fact, it's hard to figure out exactly what they're up to or gauge their impact. Are they doing something illicit? If so, what? Or do the patterns emerge spontaneously, a kind of mechanical accident? If so, why? No matter what the answers to these questions turn out to be, we're witnessing a market phenomenon that is not easily explained. And it's really bizarre.
When my professors hear that I play EvE and ask what it is to generate polite conversation, the way I can connect ingame events to the real world always has them fascinated.
I talked for for hours with my accounting professor on how the economy works, and how I would set up accounts to keep track of expenses for my characters industrial profits...
But it's nice to know that there's bot programs out manipulating the world markets. It makes one feel all secure and trusting in our economic system.
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Blacksquirrel
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Posted - 2011.08.21 07:45:00 -
[2]
Bah old news. Actually a really interesting wired article on this, and how real estate prices shot up because of the data-center in new jersey I believe. This is what was attributed to that super huge drop and rebound what about year ago?
Because we foolishly put so much stock (pun intended) in our perceived economic health from the stock market. It really makes me wonder how easy it would be cause a manipulation for failure into the market. Meaning know how they buy and sell and why and give off false numbers to cause a mass sell off or buy order. They also look to self correct, and analyze other things which if known impact those to prevent such measures. Granted people can override such programs, but it's not known how much control people do actually have over them or if you can easily turn them off or are they integrated into other functions in which it would be a laborious process to do so.
Speculation of course...but they're not bullet proof as we have seen.
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Shadowsword
The Rough Riders
Ares Protectiva
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Posted - 2011.08.21 09:32:00 -
[3]
Edited by: Shadowsword on 21/08/2011 09:32:54
Those bots are the center of what if called "High Frequency Trading". A year or two ago, something weird happened with them, and they crashed the stock exchange for hours.
Their existence is a poster child of just what got the world into this mess: not enough regulation.
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Akita T
Caldari Navy Volunteer Task Force
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Posted - 2011.08.21 11:03:00 -
[4]
Originally by: Shadowsword
Their existence is a poster child of just what got the world into this mess: not enough regulation.
Actually, something even simpler : the legality of "shorting".
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Akita T USEFUL EVE LINKS collection |
Grimpak
Gallente
The Whitehound Corporation
Frontline Assembly Point
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Posted - 2011.08.21 12:05:00 -
[5]
Originally by: Blacksquirrel
Because we foolishly put so much stock (pun intended) in our perceived economic health from the stock market.
that reminds me of what happened back in 1929.
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The more I know about humans, the more I love animals.
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Blacksquirrel
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Posted - 2011.08.21 15:13:00 -
[6]
Originally by: Grimpak
Originally by: Blacksquirrel
Because we foolishly put so much stock (pun intended) in our perceived economic health from the stock market.
that reminds me of what happened back in 1929.
Yeah too bad this go around we had far less people throwing themselves out of buildings, or strangling themselves with ticker tape. Shame really might have done us all a favor if those wall street types had. See thats what we lack from ye olde times. Conviction.
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Jno Aubrey
Galactic Patrol
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Posted - 2011.08.21 19:37:00 -
[7]
Maybe it's SkyNet's kinder, gentler brother.
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Name a shrub after me; something prickly and hard to eradicate. |
Danton Marcellus
Nebula Rasa Holdings
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Posted - 2011.08.21 21:11:00 -
[8]
Originally by: Jno Aubrey
Maybe it's SkyNet's kinder, gentler brother.
I just refer to it as Skynet.
Also Known As |
Herzog Wolfhammer
Gallente
Sigma Special Tactics Group
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Posted - 2011.08.22 15:26:00 -
[9]
Research "Persona Management Software".
An automated way of bringing Salinsky's "Rule for Radicals" into every open forum and social network with the goals of controlling the psychological environment and creating false consensus.
The next time you go with the herd on some concept or ideal, best to wonder about this.
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R'adeh
Gallente
Storm Solutions
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Posted - 2011.08.22 21:36:00 -
[10]
I wrote my own bot to trade Forex...lots of work, but (finally) paying off. There's tons of automated trading systems, humans are just too damn slow to take advantage of the smallest edges. Also, some of those orders are on the off chance that something goes wrong and they end up getting filled...leading to RIDICULOUS profit margins.
For example, when the market makers broke the stock market for a few minutes last year, some stocks crashed by 90% for a few minutes. If you had a buy order open at 10% of the previous price, you would have made a killing.
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<Random sig with a hot chick> |
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Alain Kinsella
Minmatar
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Posted - 2011.08.23 10:37:00 -
[11]
Originally by: R'adeh
For example, when the market makers broke the stock market for a few minutes last year, some stocks crashed by 90% for a few minutes. If you had a buy order open at 10% of the previous price, you would have made a killing.
Except for the fact that just about every exchange 'busted' most of the trades during that period.  God what a mess.
@ Akita - The issue is not with short selling itself (it has its uses when done correctly). Its the practice known as 'naked' short selling that's been the real mess of a problem - especially if you combine that with automated systems of every stripe.
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Slade Trillgon
Endless Possibilities Inc.
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Posted - 2011.08.23 10:56:00 -
[12]
Originally by: Alain Kinsella
Originally by: R'adeh
For example, when the market makers broke the stock market for a few minutes last year, some stocks crashed by 90% for a few minutes. If you had a buy order open at 10% of the previous price, you would have made a killing.
Except for the fact that just about every exchange 'busted' most of the trades during that period. God what a mess.
That is actually somewhat comforting...
:tinfoil: as those really low orders could be there because the individuals that instigated the situation had them there for the sole reason to take advantage of their predicted crash.:tinfoil:
Originally by: Alain Kinsella
@ Akita - The issue is not with short selling itself (it has its uses when done correctly). Its the practice known as 'naked' short selling that's been the real mess of a problem - especially if you combine that with automated systems of every stripe.
Interesting.
Slade
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