Why Not Sleeping Properly is Affecting Your Trades
Dr Chris Idzikowski, a consultant at the London Sleep Center, discusses how a lack of sleep affects those working in the city. He also says he saw a big rise in patients after the debt crisis.
Video below.
From Natural Resources to Currency Wars
Must watch weekend video with Laureen Lyster.
On Draghi, Weill and the always interesting Rickards.
Video below.
Understand Wall Street
Passage from Octopus, by Guy Lawson, via Matt Taibbi.
As a velocity trader, Graber constantly bought and sold the same stocks… He talked about the stock he traded with intense passion, passing around made-up gossip, false speculation, and occasionally real news – anything to stir up action. One of Graber’s abilities was to “paint the tape,” the illegal practice of trading with the sole purpose of moving the price of a stock. The agribusiness giant Archer Daniels Midland was one of the stocks Graber fooled with relentlessly. To paint the tape on ADM, Graber and Israel would call eight different brokers and put in buy orders simultaneously to run up the price – at a time when Graber was holding lots of the stock ready to sell into a rising market. It was a racket the Securities and Exchange Commission was hopelessly ill-equipped to stop.
“The SEC questioned Freddy all the time,” Phil Ratner recalled. “But they couldn’t catch him. He traded so much that it was impossible to say he’d traded on inside information.” (Full article here).
Fear of HFT
We have written extensively on the HFT theme. As ordinary people pull out money from the markets and regulators lack competence on the HFT subject, the first warning signals are heard from the industry.
“We’ve gotten a little anxious when you hear that, on a given day, high-frequency traders of all types … make up 60, 70, 80 percent of what’s trading,” Andy Brooks, head of U.S. stock trading at the firm, said in an interview. “The public’s confidence in pricing and markets, and getting a fair deal and earning a fair return, has been challenged. And these guys — the more aggressive high-frequency traders — undermine confidence. And that’s bad for everybody.”
Baltimore-based T. Rowe Price, with its focus on small investors, is one of the few financial companies to break the industry’s code of silence on criticizing rapid traders.
Former Delaware Sen. Ted Kaufman, a Democrat, likens the boom in high-frequency trading, with its novelty, complexity and opacity, to the bubble in mortgage bonds a few years ago. We know how that turned out.
Future of HFT
As HFT churn this no liquidity market, we present you thoughts on the Future of Computer Trading in Financial Markets.
Computer based trading has transformed how our financial markets operate. The volume of financial products traded through computer automated trading taking place at high speed and with little human involvement has increased dramatically in the past few years. For example, today, over one third of United Kingdom equity trading volume is generated through high frequency automated computer trading while in the US this figure is closer to three- quarters.
Whilst the prevalence of computer based trading is not disputed, there are diverse views on the risks and benefits which it brings today, and how these could develop in the future. Gaining a better understanding of these issues is critical as they affect the health of the financial services sector and the wider economies this serves. The increasingly rapid changes in financial markets mean that foresight is vital if a resilient regulatory framework is to be put in place. A key aim of this Foresight project, which has been overseen by a group of leading experts, has therefore been to draw upon the very best science and evidence from across the world to take an independent look at these issues.
Full reading here.
Trading Psychology Captured
Guest Post by Macro Story;
It’s game 7 of the world series, bottom of the ninth and you are up by 3 runs with a runner on second and third with no outs. As a second baseman or any position for that matter you know before the next pitch how you will react to different scenarios. If you wait until the ball is thrown and batter swings to determine where you will throw that ground ball to you it is too late.
Markets are no different and as as we approach what likely could be a very volatile trading week it’s important to know before the opening bell how you will react intraday. Perhaps you have such a long time horizon that you will do nothing and that is fine. But what, just what if markets present you with a major intraday swing either way of 5-7%. Will you enter limit orders to capture such move should they happen?
Plan ahead and don’t wait for the moment to ask yourself what to do. Decisions made during times of high emotions are often regretted down the road. This is a decision you must make. No one can make it for you. Be prepared!
HFT, Volatility and Speed
For anybody trying to buy or sell more than a couple of thousands shares, HFT is not providing liquidity. Yes the spread is smaller, but it is virtually impossible for a fund manager to put money at work at any given time, as the prices simply are not statistically significant. The Trader has argued for quite some time, that yes, we need the new technology, and we use it ourselves, but the Predatory Strategies by certain HFT Firms, is not adding to liquidity, it is not creating a more effective environment, but it is feeding the exchanges, and slowing down the system for non HFT due to quote stuffing etc. We are not arguing for going back to the Good Old Times, we are just arguing for the HFT Firms to be regulated in a fashion, so the Market Structure improves, not get worse. The total effect to the Society is a Loss, despite some of these firms making extra money. The Market is showing a Structure Fatigue, that could lead us to a total breakdown of the system.
As we have provided many negative aspects of HFT, here is a PRO HFT argumentation, by Mr Narang. Let’s see how long they will stay in business, as the Regulators will start the Witch Hunt. After reading the below, check out the latest from Nanex, as HFT brakes the speed barrier of light….
In recent months, a plethora of articles have remarked on elevated levels of market volatility, while simultaneously pointing out that computers generate an ever-growing share of the market’s volume. The implication, or in some cases, outright accusation, is that the latter is the cause of the former. While the recent front-page New York Times article on this topic refrains from outright casuistry, it does follow the typical pattern of using coincidence to suggest causality. Not only is this sub-par journalism, but it is bad statistics — particularly when the numbers themselves can easily be used to draw relevant causal inferences.
The article correctly notes that there has been an increasing incidence, in recent times, of days exhibiting unusually high volatility (measured as days when the close-to-close return, or alternatively, the high-low trading range are large in magnitude). However, in sharp contravention to what is now the conventional wisdom, the very same data used by the article’s authors also reveals that computerized trading (in particular, high-frequency trading), bears absolutely none of the culpability for this.
Full article here.
Back to the Future as HFT Breaks the Speed of Light Barrier
| By Nanex. The Trader has no comments…
On September 15, 2011, beginning at 12:48:54.600, there was a time warp in the trading of Yahoo! (YHOO) stock. HFT has reached speeds faster than time itself. Up to 190 milliseconds into the future, or 0.19 fantaseconds is the record so far. It all happened in just over one second of trading, the evidence buried under an avalanche of about 19,000 quotations and 3,000 individual trade executions. The facts of the matter are indisputable. Based on official exchange timestamps, there is unmistakable proof that YHOO trades were executed on quotes that didn’t exist until 190 milliseconds later!
So we can be certain the exchange timestamps were accurate, which means that HFT has truly entered the era of the fantasecond. |
Stoxx 50 approaching 2009 lows
Stoxx futures breaking below 2000 in early Trading. Stoxx is up a little more than 10% from the 2009 bottom. That is a 5% annual gain, if you bought the rock bottom ungeared. Long term value investing is out of fashion. Let’s see when Central Banks start loading up on Stoxx futures, it is geting cheap…
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