High Frequency Trading

I didn't see the video, but I think it's fairly cool in an almost pathetic way.

the math that goes into this stuff is crazy and what leads up to those micro-crashes or whatever. It's also crazy that fibre optic cables are too slow, and people are buying property with line of sight to closer buildings because the light travels faster through air.

It makes no sense to me how people can make money by exploiting the system like this instead of like actually investing in companies that make products or whatever. I don't get any of that stuff though, i'm for sure no economist. That part is quite boring to me.
 
Good read, Michael Lewis is great. This only touches on one aspect of HFT though, there are actually a few other strategies they use. It's estimated that 50-70% of equity trades are created by computer algorithms, which is a little scary if you think about it.
 
High frequency trading is awesome. They make a tiny fraction of percentage on each trade, but they do it thousands of times a second. The good HFT firms turn in over $100 million in annual profit without knowing shit about any of the companies they trade.
 
they send light through the air instead of through fiber optic cables, because it travels faster in air. which allows them to trade a bit faster than their competitors.
 
pretty sure its all going through cables and people are trying to get more direct routes with the cables. haha its not like they have a choice of whether they want their data transmitted by air or cable
 
yeah they do. they have been transmitting data using regular microwaves for awhile now, and starting to use lasers for more bandwidth.
 
yea watched that last night, some prety crazy shit.

but did you see the bit about the guy who made tesla? that guy is a boss.
 
do you have any sources for this? from what i gathered from the article, companies were basically trying to buy property closer to the market to cut down on the distance the data had to travel through fiber optic lines.

i didn't see anything about laser transmissions, etc....
 
I don't have any online sources, although I am sure a google search would find it unless i'm full of shit. I was told by my optics professor, who worked on laser trasmission. microwaves are faster than fiberoptic cables for obvious reasons, but they have lower bandwidth and stuff like weather can affect the transmission quality and lead to more packet loss. Lasers have the speed advantages that microwaves to, and don't have the transmission/bandwidth issues associated with them.
 
Im pretty sure that you are completely wrong. Did you even read the article?" people are buying property with line of sight to closer buildings because the light travels faster through air" is bs. It even says in the article that Light travels the fastest in a vacuum, not air. Line of sight shouldn't matter. Vacuum sealed fiber optic cables would be/ are much faster as it is mentioned.
 
In the original article it says, "Light inside fiber bounces off the walls and travels at only about two-thirds of its theoretical speed." I would imagine that a laser could move a lot closer to the actual speed of light, so if you were using an inefficient or unreliable connection of the sort mentioned in the article, it could definitely make sense to use private laser or microwave links in some situations.

Also, OP, thanks for the original link! I loved Moneyball and The Blind Side and I'm definitely going to pick up Flash Boys now.
 
Really good read. I don't really play into finance and investing, but it's a breath of fresh air to hear that someone's tried to level the playing field and seems to be succeeding in doing so.

As was stated, you can't really blame the traders who found out how to work the system to their advantage, but it's definitely worrisome that the core values of the stock market were exploited for their own interests. still a scary prospect that many well-meaning investors' money has been/is being played with in a not exactly honest fashion.
 
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