Low-Latency Network Shaves Milliseconds from UK-Asia Traffic 157
New York's had its turn; now, an anonymous reader writes with this excerpt from eWeek Europe: "Financial traders and law firms are set to benefit from a new low-latency network between London and Hong Kong, which can conduct data on a round trip from Europe to Asia in around 176 milliseconds. The cable network, run by UK-based trading technology company BSO Network Solutions, has been in place for some time, but previously had to route around large parts of Russia, due to difficulties laying fibre in that country. However, a new lower latency and higher availability 'Transit Mongolia' connection has helped to reduce the time of a round trip by more than 20 milliseconds during the last 12 months."
lets talk about... (Score:2, Insightful)
We can talk about how scumbags are ruining the market again...
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lets trade faster and faster with micro sums of money and waste ultra low latency networks for no reason... What's next, wasting massive amounts of electricity to to generate fake money? idiots....
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Solution (Score:2)
When are they going to learn and force all trades to happen in bins. I.e. all trades arriving within each X seconds (or even some reasonable fraction) window get treated the same. The window being well-known and the same for all traders. That would put an end to most of this zero-sum gamesmanship trying to beat/trick/manipulate the other guy's trading algorithm and jump ahead of normal Joe Shmoes who can't afford to get a fat/fast pipe within uS of the trading network.
Oh, wait, the exchanges are making
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Lets talk more about how corrupt lobbiest from these companies can buy off any laws and stop any attempt to safeguard the market.
If I were the CEO of BSO I would hire the best lobbiest money could buy as in this particular climate it is not unreasonable for lawmakers to prevent me from making money.
You can't win since these trading firms own 75% of the worlds money! You say the rich own it right? Well, where do the rich keep it? Not under their matresses but to these guys who then use the money for private
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Unless it was the wealthiest 1% of us, not very much...
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There is no point. Your solution would cost more money than the margin currently collected by arbitrage specialists. Since the latter are competing amongst each other, the margins are always under pressure.
Joe Schmo just wants to buy a share of Shell, and would rather pay $61.33 on a US market, through his own broker, than to open up an account in London, quickly exchange some dollars for pounds, and buy it there for $61.31 before the price goes up. It's just too much hassle and risk, and extra fees.
Now com
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The following does not make it cheaper for Joe:
http://www.nytimes.com/imagepages/2009/07/24/business/0724-webBIZ-trading.ready.html [nytimes.com]
http://www.nytimes.com/2009/07/24/business/24trading.html [nytimes.com]
And it happens a lot. There were some that had very long "winning streaks" (months?), which is impossible for normal traders. It's basically two classes of traders.
The ones in the right class get their trades rolled back if "stuff happens".
The ones who aren't in the right class get prosecuted for winning: http://www.comput [computerworlduk.com]
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Of course, that's a form of front running, which is illegal. In itself it has nothing to do with high speed trading, just like your other examples of fraud and corruption. No doubt that these things are happening in the stock market, just like they are happening anywhere else. That's why these things are illegal.
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But has what they are doing been made illegal yet? http://en.wikipedia.org/wiki/Flash_trading [wikipedia.org]
So far much of these HFT stuff has just been a way to either front-run or disguise it, so I'm not convinced about the benefits to the rest of society.
Proponents can talk about liquidity and creating markets till the cows come home, but when what I linked to keeps happening, there doesn't seem to be a net benefit.
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So, if the computers get a time advantage and can guess where the stock is going and then set prices for the slower traders, that's OK. But if humans do it and beat the computers at their own game, not OK? Gotcha.
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Those two NYTimes articles refer to flash trading [investopedia.com], which was short-lived on several exchanges (most notably the NASDAQ). This does not happen a lot; it was shut down within months.
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Yet it shows nicely how markets and some financial institutions are willing to bend the rules for their mutual gain to the detriement of a third party: the common public.
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In this example, the benefit is small. Of course, if Joe is an active day trader, and trades his 100 shares 20 times a day, he could have saved $20 in total.
Also, the arbitrage trader only took $1 off the table for his services, so while the benefit is small, the fee is similarly small too.
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In other news, I have to pay more for concrete and lumber than do any of the big-box hardware stores.
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Putting those neutrinos to work! (Score:5, Funny)
Putting those FTL neutrinos to work, eh? Good job on the time-to-market, guys!
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The original time-to-market was about 70 years, but they then used the FTL network to send the plans back to the present day. They're rolling it out in 20 ms increments to maximize profits.
Normal Neutrinos (Score:4, Insightful)
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You could do this with normal neutrinos - they's travel through the planet, not around it. However your receiver will be a bit on the large side. If they had FTL neutrinos they could do far better: they could receive the signal before they send it!
No, it couldn't. Even after the last neutrino story, I still haven't seen anything to support this claim.
Imagine a person situated at an equidistant point between London and Hong Kong, somewhere in orbit, 300 ms @ c away from both places. Imagine an instantaneous FTL transmitter. Imagine all 3 people have synchronised clocks based on UTC.
Times in ms after
Traditional
At 0ms Message sent from London
At 88ms message received in HKG
At 89ms reply sent back to London
At 177ms reply received from HKG
At 300ms message
It is good therefore it is evil (Score:1)
It makes market more efficient therefore it is evil.
It makes money therefore it is evil.
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It makes market more efficient therefore it is evil.
It makes money therefore it is evil.
You're an idiot therefore you think you're clever.
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You think you're clever, therefore you're an idiot.
One step closer to their dream... (Score:2)
... of being able to outsource the high speed trading decisions to countries with lower labor costs, thus saving millions and increasing shareholder value.
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If you meant coding the machines that actually make the decisions, then yes.
Honestly, I don't know why somebody hasn't made a fucking fortune tricking the high speed trading machines. Remember a couple years ago when a story about the anniversary of a plane crash got picked up by Bloomberg and fed into the machines, crashing United's stock?
http://revealingerrors.com/google_news_ual
Why hasn't somebody applied SEO skills to a fake news story in order to manipulate a stock? Sure, SEC, yada yada - but I be
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There were a couple of guys in Sweden (IIRC) who figured out how a couple of the bots were trading, and then figured out how they could make money from that.
Guess what happened to them? If you guessed "retired on their fortune" then you guessed wrong. The right answer was that they were arrested and tried (can't recall the charge) for stepping on the big boys' toes.
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There were a couple of guys in Sweden (IIRC) who figured out how a couple of the bots were trading
Either that or Norway [slashdot.org].
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"Honestly, I don't know why somebody hasn't made a fucking fortune tricking the high speed trading machines."
They already have. I saw some graphs a year ago from Goldman Sachs which showed wiggles going upward from obvious pump and dump schemes. Basically they use the FTC to change the market price and as soon as it goes down the computers then buy the shares it was selling a few milliseconds earlier so the price goes back up, which in turn then sells it a few milliseconds after that and so on. It was weird
Super-low latency trading Considered Bad... (Score:5, Interesting)
While it's very nice to have low-latency connections for lots of things, the current state of electronic trading means that even lower latency links are BAD for the world.
We're currently at a position where we give a HUGE advantage to those able to afford systems which can trade at lower latencies than others. Boiled down to it, that means the more wealth you have, the easier it is to create more wealth at the expense of those who don't have access to such super-fabulous systems and links. Basically, if I (some corp) can afford $100m in systems next to/in a trading center, I can make huge profits on arbitraging trades by even someone who has a $10m system slightly further away, and the ordinary human trader is screwed. None of that profit the mega-corp makes is economically useful activity (ask any economist) - they're simply leeches in the system, able to legally game it to their advantage (and, to everyone else' disadvantage, since trading is a zero-sum game).
From a societal standpoint, I see no benefit whatsoever at the current sub-10ms trading intervals, and the trend (which this new network link is a part of) to lower this even further for the privileged few bodes worse.
Sub-human-response-time trading is BAD for everyone except the trading floors (and their cronies, the investment banks), which live like leeches off of the financial system, sucking off profit from everyone else's trades (or, what do you think high-end arbitrage is?) It's also what leads us to those stupid market "storms" where automated systems jerk the trading around far faster than human can tell the computers are out-of-whack.
Bottom line - the tech this story promotes is great, but the primary purpose driving it isn't. We need to get a hold on the use of our technology.
-Erik
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I agree 100 percent... But what to do about it?
I would assume all this computer firepower will somehow level via market forces... BUT at the expense of little poor me and my e-trade account?
Seems to me the "knowing" of this could be used by someone who is smart... i.e. a "hacker" but again, how?
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Transaction Tax. Higher taxes on income generated in this method.
Remember, TAXES are regressive and slow down economies. You tax something you slow the velocity of money. This is something the LIberals will never admit. For all its ills, Capitalism seeks efficiency of capital.
Of course, this news makes class warfare easier.
You're wrong (Score:2)
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"human beings consistently make rational choices"
All economic models make that very same mistake. The problem is that you cannot legislate rational choice, without taking away freedom. However, unlike all other economic models, Capitalism punishes the least efficient use of capital.
Take Solyent Green Scandal currently in the headlines, the company should have failed BEFORE Obama gave the loan guarantees. It was NOT a viable company before, it certainly proved it wasn't viable afterwards. The punishment of i
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As for that solar start up, it's not that much of a scandal. They didn't run off with the money, they just made an engineering mistake, namely that the price of silicone would continue to rise, so they invested heavily in alternatives. The price dropped, and all their tech was useless. Yes, it's unfortunate. Yes,
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Modern Socialism is the power of the "state" to enforce "rational" decisions on some people, but excuse other irrational decisions with state funded bailouts. Modern Socialism is just as irrational as all the others, it just pretends it is rational.
I'm not excusing the Bailouts of the banks. In fact, if you asked me, I wouldn't have bailed out the banks with anything. I wouldn't have bailed out Wall Street. I would have let them figure out how to get themselves out of the mess they go themselves into. This
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I would separate capitalism from government bailouts. Capitalism punishes those who screw up, then the government comes riding in. I call that 2 separate mechanisms. You also then contradict yourself with the solar startup- they made a bad call while the government gave them money. Your burning the candle at both ends here.
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Im not sure the solution to "capitalism drives people to ridiculous measures to make penny profits" is "give the government more money". And practically speaking, it would mean that the government would have a vested interest in pushing this type of behavior.
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We're currently at a position where we give a HUGE advantage to those able to afford systems which can trade at lower latencies than others.
If you are smart enough and motivated enough to put together a high-frequency trading algorithm that makes money, someone will give you a book. I don't think there is a big problem with really smart people with unused effective high-frequency trading algorithms sitting around.
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Now that you point it to me: not only we have an unfair system, we also wast a lot of smart people on that.
People that could do something useful (for the whole society) instead...
Re:If you're saying that... (Score:5, Insightful)
In the market, every bit of market research you do, every bit of data you buy, every moment you spend educating yourself, and every dollar/minute you spend analyzing the data is to find someone to take advantage of on the other side of every trade you make.
How is arbitrage any different - it's just a different avenue?
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What in the world are you talking about? Arbitrage is all about people taking a risk in exchange for reducing price differential (where they take a profit). The risk is that in the time it takes them to buy and sell, the price at the destination will change and they will be left holding an unprofitable load of merchandise. The advantage afforded by faster information is the reduced risk.
So yeah, you need access to an expensive, high-speed network in order to compete in the arbitrage game. Not fair?
You need
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None of that profit the mega-corp makes is economically useful activity (ask any economist) - they're simply leeches in the system, able to legally game it to their advantage (and, to everyone else' disadvantage, since trading is a zero-sum game).
I broadly agree with you, but it's not true that there is no useful work being done. The arbitrage that this high speed link enables has the direct effect of bringing HK prices in line with London prices and Wall Street prices, with lower latency. It is a benefit to each regional market that you can get the best price in the world at the click of a button and not just the best price on a particular exchange. It is of special benefit to smaller exchanges as HFT arbitrageurs transfer liquidity from the large
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The fact that they are building more capacity is a good thing. More infrastructure based on market demand, it will be used for something productive eventually, as the world solves the real problem that leads to HFT [slashdot.org] (if it ever does with thinking like this [slashdot.org], promoted by pseudo-economists).
The Western world, including USA needs to stop expecting free money and cheap goods to be there forever for them. Production is the only thing that will remove the poison of over-leveraged vendor and Fed financed consumptio [slashdot.org]
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This is why we need a transaction tax and government controlled servers that add a random delay of 0 to 30 seconds each time. Of course no government would ever dare implement either, especially the UK. We created a monster.
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Yes, but with the addition of leverage they can magically create more money. Not that that has ever caused any issues...
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Where did I read this, here or in IEEE?- A new datacenter is being put up to process transactions in NY state. It is touted to be "equal access," but in reality it's not. Those big guys pay for servers right next to the transaction servers and may have faster comm links. I forget the rest of the details, but in the end the promised equal access to normal folk is a smoke screen.
But you're right, no one in the trading industry is going to care as long as they can edge out someone by $0.01 on a million shar
What I want on my wish list... (Score:1)
Routers using quantum entanglement to transmit data over long distances. Whee!
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Doesn't work. All you'll get out of it will look like random noise. It's not until you received the key via normal transmission that you can decode the message.
Why law firms? (Score:1)
I understand why financial institutions want the lower latency but what work could a law firm be doing that could in any way benefit from 20 ms faster packets?
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I understand why financial institutions want the lower latency but what work could a law firm be doing that could in any way benefit from 20 ms faster packets?
So they can sue faster!
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COOL!!! no more waiting for Zing Lee - asian Pr0n (Score:2)
Why does it take 176 milliseconds to do that? (Score:5, Interesting)
Wolfram Alpha [wolframalpha.com] tells us that the direct path round trip by fiber would take 90 milliseconds. I'm rather impressed that it takes less than twice that to do the trip in reality, what with all of the additional routing delays and non-ideal paths that the data must take.
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Wolfram Alpha [wolframalpha.com] tells us that the direct path round trip by fiber would take 90 milliseconds. I'm rather impressed that it takes less than twice that to do the trip in reality, what with all of the additional routing delays and non-ideal paths that the data must take.
1) C is speed of light in vacuum, fiber is not vacuum, hence speed of light in this case is not necessarily C
2) No routing equipment can do calculations faster than C (unless you had the perfect parelel processor and OS), so you have packet, then A -> D conversion, then OSI model parsing, then protocol-specific filtering, then routing, then route-based filtering, then D -> A conversion, then send packet back out
3) Repeat step 2 for each hop
4) Last hop, repeat step 2, but add "request/response" process
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2) Having "perfect parelel [sic] processor and OS" are not necessary to gain a boost over a single processor. The overhead just needs to be particularly small in this case.
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The answer, obviously, is kuantum cantangueled routers.
(misspelling on purpose)
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C is speed of light in vacuum, fiber is not vacuum, hence speed of light in this case is not necessarily
It looks like this GP used wolfram alpha's "light in fiber" travel time so he covered that one.
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Have you actually looked at his link? The only c he entered was part of the word "distance". And the number he wrote in his comment is (rounded) twice the number Wolfram Alpha gives for the travel time of light in fiber (light in vacuum has a travel time of only 32.2 ms, according to WA, so the round trip calculated with that would only be 64.4 ms.
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repeaters, routers, non straight lines, multiple telcos, etc, etc, 176 is pretty good.
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Why not just VPN into the destination country. Ping times like you're there since you're virtually on that network.
FIRST POST (Score:1)
Damn!
I need to get one of those new low-latency networks!
Great things in store (Score:5, Funny)
I can't wait to get my spam and server bot attacks even faster than before.
subject (Score:2)
Having just dealt with a fuckton of spam, I'm hoping routing around large chunks of Russia will be the rule from now on.
Sting (Score:1)
Those 20ms shaved off the previous route could make for a super-fast sting operation against those using the old system.
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Traders who make money through "arbitrage" need access to more than one exchange — they're making money off the price differences of securities on each. They justify this as being beneficial to the market, because they're making prices equal across the world. Guess it's just coincidence that it's beneficial to their bottom line too, eh?
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because they're making prices equal across the world.
They also improve liquidity.
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I have a question that may or may not be related. I keep asking but haven't heard a good answer.
How is that possible? Why hasn't the weakness of the stock market and real estate
Re:if you have to use this youre doing it wrong. (Score:5, Insightful)
It's possible that HFT is contributing to it to some small extent, but I would think that other factors would have more to do with it. For one thing, the super rich have highly diverse investments. They own stocks, but also government bonds, corporate bonds, land, commodities, etc. It is very rare that all of those things go down together, and in fact usually when one of them goes down another goes up. They also have a bunch of high-priced investment advisers whose entire job it is to make sure they aren't on the losing side of the deal and that if they might be then it's properly hedged.
On top of that, a lot of these people outright own a large private company, and a lot of those companies will regularly beat the market because they're run by the owners rather than officers overly focused on quarterly profits and afflicted with the principle-agent problem.
The thing that concerns me about HFT is that it's quite possibly a significant cause for why the stock market is doing so poorly. Think about it: If the HFTers shave a penny or so per share off of each trade between exchanges, future prospective buyers will be willing to pay that much less for their shares, because they know that when they ultimately sell them they'll suffer the same loss again to the HFTers. In consequence the seller is obligated to lower the price by that small pittance per share in order to make the trade, which sets the new market price for the stock. The value of the stock will continue to go down until it accounts for the amount of value the HFTers remove over the period of time that the average investor holds the stock.
The more the HFTers make over a given period of time, the less the stock is worth to "real" investors. More to the point, if the "true" value of the company does not increase faster than the speed at which HFTers remove value from stockholders through arbitrage, the value (and therefore stock price) of the company will continue slowly falling indefinitely, because no one will want to buy shares that will post-arbitrage be worth less than they paid for them. (In practice what will happen is that the value will fall until the only remaining investors holding the stock will be long-term investors, who reduce the value removed by HFTers because they no longer have a sufficient volume of trading to arbitrage, and so the stock will stabilize at a non-zero price where the value of the company is increasing faster than the arbitrage removes, but at a much lower value than it would be absent HFT.)
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You are imagining the "penny shaving" from a buyer's perspective, but market makers view buying and selling as mostly symmetric (buy low, sell high; or sell high, buy low), hence why the spread is impacted and not the "price". In actuality, HF market makers are competing with each other for increasingly small penny-shavings, and they're able to do so because reduced latency leads to reduced risk.
I am imagining it from the perspective of anyone who is not a "market maker" -- someone who intends to hold the stock for more than a minute.
Let's take an example. A company has 1000 shares of stock. 800 are held by long-term investors who all intend to keep them for at least a year as long as nothing drastic happens. 200 are held by short term investors, who each intend to sell them within a short period of time X. The buyers for those 200 shares in turn intend to hold them each for another X period and th
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Regardless of the holding duration, that's a buyer.
This is not a valid premise—the behavior you are describing is more fitting for bonds, or perhaps dividend-bearing stocks (where the $0.02/share is reflected in cash rather tha
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Regardless of the holding duration, that's a buyer.
Not if they already have the stock and are deciding when to sell it.
This is not a valid premise
The premise is not required, it is only a simplification to make the explanation easier. Let me put it a different way: Suppose that in the world without market makers, the majority of people would expect it to go up by approximately the specified amount. I am only trying to create a baseline in order to analyze the effects of modifying it.
Your further analysis basically comes to the conclusion that market makers remove capital from the system, depressing stock prices. Among other things, this ignores the set of participants who lose money on their trades.
Unless you are trying to argue that market makers on average have non-positive net profits, I'm not su
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I apologize for being unclear. What I mean is that your[1] participation strategy in the stock market is to buy stocks, let them appreciate, and then sell them. Your profit when stocks you own appreciate during your holding period. This is in contrast with market makers who profit when stock prices don't change during their holding period.
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The businesses that they own 50% of made money in that time. Lots of money.
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Doing it in milliseconds rather than a minute reduces the risk for the trader.
Buying some stock in Asia, and selling it a minute later in New York carries a much bigger risk than selling it 0.1 seconds later. A minute may seem short to you, but when you spend all day doing those trades, a window of a minute means 600 times the risk of a 100 millisecond window that the price of the stock will change.
To offset this 600x bigger risk, the trader needs to have bigger profit margins on the trade as an insurance,
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That higher risk only exists if the price can change at such a small time scale. Higher trading frequency decreases the time scale at which the price can change, and therefore does not give the high frequency trader a lower risk, but instead increases the risk for any non-high-frequency trader. Basically, it doesn't matter at which frequency you clock your market, as long as that frequency is higher than the relevant real economic frequencies. Which are certainly not measured in milliseconds. However, the f
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Information relevant to the market comes in at all times of the day. For instance, in the middle of a trading day, news could come out that a company has a major setback, like an explosion on a big plant. If a trader was just in the middle of a stock transaction, having bought some cheap shares in Asia, and trying to sell these in London for a penny more, and this news hits the market, all of a sudden the buy offer may be canceled, and the trader is stuck with overpriced stock.
For Joe the investor, it is pr
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Great, all we need is a faster way to orchestrate a market crash.
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No, it's not a coincidence. A lot of people that are producing things that are beneficial to others are contributing to their own bottom line when doing so. In fact, most people do exactly that.
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Sure but each office can only be across the street from ONE exchange.
Currencies, commodities and some shares are traded on multiple markets. If you own the first computer to spot a difference in price between the same item in different markets then you can make money by making a buy in one market and an equivilent sell in another. The faster you can exchange data the lower the risk that someone else will get there first.
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Yes, all very well thought out investments that will help the companies and economy grow strong for the long term.
This kind of split-second trading has to stop.
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I find this offensive
You offend too easily. It's a common phrase, like saying "everyman" or "Joe the plumber".
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Congrats?
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The idea isn't THAT simple.
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yea boo hoo you state this horseshit every chance you get, obiously your not busy enough with your special grandchilderen or your awesome career so STFU already you bleeding heart
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Man dude, while your advice may be pertinent to somebody visiting websites, this is a very different communication going on, with no web browser involved at all.
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your an idiot
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Anonymous is right....
Someone bump up parent post...
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the internet the web. The guys in the story are certainly not doing web stuff.
nice rant though.
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why do you cower? what are you afraid of?
cower in my shadow behind your stolen webpages some more, feeb
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your and ignorant hypocrite