• wjrii@lemmy.world
    76·
    3 days ago

    One of my college roommates is an algorithmic high frequency trader. It always reminded me slightly of a legal version of the Superman 3/Office Space scam. Basically trade so fast whenever your algorithm sees the line go up the right way that you harvest tiny amounts all day before the humans actually making financially relevant decisions make the market move in larger chunks for actual economic reasons.

    It’s taking money while providing literally zero value to anyone else, even your fellow finance bros.

    • Liz@midwest.socialEnglish
      2·
      2 days ago

      The thing that gets me about HFT is that the market itself could automatically facilitate price inversion trades. There’s literally zero need for these middlemen.

      • wjrii@lemmy.world
        8·
        2 days ago

        I dunno. I’m not suggesting that what they do is illegal, just that it’s useless profit skimming from the inherent inefficiencies of humans getting together to make deals. Before high speed trading, it would just be noise in the line that would level out within minutes or even seconds, but these guys can tell their computers to trade pretty much instantly, and make money off banal shit like “mutual fund X starts their daily 401k purchases right after lunch, and it takes them Y minutes to finish them, so if you see Z orders coming in, have the computer trade at certain threshold and make a few cents.

        I’m making that scenario up, and they’re constantly competing with regulators and other firms so it might not even be viable, but the granularity and timeframe and how stupid it is to be able to reliably make money off that kind of variance is very real. Humanity doesn’t move that fast, and there’s nothing of value to society from doing a blackjack rake like that. It’s a fairly small part of the overall market, but it’s just money and brainpower being sucked out of the system for no reason whatsoever.

      • LifeInMultipleChoice@lemmy.ml
        4·
        2 days ago

        The data of the buying/selling would be tracked by software via the stock broker, which would aggregate into a tax form via other software, and then be imported into their taxes by more software.

        I think a 1099B at the end of the year coming from whatever company they are using would cover it.

  • vga@sopuli.xyz
    30·
    3 days ago

    I’m not a proponent of communism at this point, but I’d be very interested to see what the computer power of all stock markets of the world could do if harnessed to solve the problem of centralized resource allocation.

    • MutilationWave@lemmy.world
      181·
      3 days ago

      I doubt the market itself has crazy amounts of computer power, but the financial firms that run algorithms to trade in milliseconds to sell a million shares to make $100k on a small bump, there’s a lot of power there. It’s really all about speed.

      They ran brand new undersea fiber to connect London to New York so the programs the corporations there run can trade milliseconds faster.

  • stupidcasey@lemmy.world
    502·
    3 days ago

    Given GDP is a fake number that increases every time money is moved eg if you and a friend hand a $1 bill back and forwards a billion times you technically just increased the GDP by $1 billion dollars. I would say he definitely increases the GDP, but the accuracy of pricing is, well relative to say the least, if we didn’t have high speed traders we couldn’t be that “accurate” so if this is true it’s still unnecessary since the average man can’t spend money at the speed of light through a distance optimized path. As far as reducing the price of anything, uh no, no that would be a stretch of even the most generous of readings.

  • Frog@lemmy.ca
    6·
    3 days ago

    Before reading the caption, I thought this was a Brian Thompson comic. I thought Brian here was explaining why United Healthcare stock price increases are good for society.

  • fckreddit@lemmy.ml
    3·
    3 days ago

    So you mean to say that trading is not based on hype, ever? What if your models have false bias built-in? I call bullshit.