[This message was posted by Robert Smythe of Intelcheck Services Inc <rsmy...@intelcheck.ca> to the "Algorithmic Trading" discussion forum at http://fixprotocol.org/discuss/31. You can reply to it on-line at http://fixprotocol.org/discuss/read/7721b42a - PLEASE DO NOT REPLY BY MAIL.]
> Not to all the above. > > But when I looked at that stock chart from May 6th going into the next > trading day - I thought where have I seen such a pattern before? Then I > thought - yes - non-linear dynamics. Things are so complex and inter- > related and all driven off of the same set of spurious signals with > multiple levels of feedback loops that we have have created this > incredibly system that is now exhibiting chaotic behaviors. Algos are > just a part - HF, multiple venues. It is just an incredibly complex > system. Maybe the SEC should surveil the system with software designed > to track and monitor earthquakes and heart attacks. > > And John - nice to hear you chime in - The Romans have lead poisoning to > blame for their decline - what is our equivalent? High fructose corn > syrup and Facebook? :) > > My two cents (before discounting) we have some good thoughts and > observations on this thread and we do need to follow larger industry > trends and begin to analyse the masses of trading data to understand the > overall system behavior. > > Someone said it best forget where I heard it within the last two days, > maybe the SEC should lay off a few dozen lawyers and hire some tech > savvy people that understand complex system behavior. > > Heck with the calvary - call in the Santa Fe Institute! > > > > > > > > > > Did algorithms lie about the market value of assets on the balance > > sheets of big banks? > > > > Did algorithms create the "too big to fail doctrine" and saddle future > > generations of children, some not yet born, with debts they didn't > > incur and can never repay? > > > > Did algorithms create fiat currencies or lever equity 100 fold? > > > > Did algorithms mandate the payout of 50% of bank revenues to people > > other than shareholders? > > > > Did algorithms create the absurd, childish notion of a "national > > market system" or approve bank holding company applications of Goldman > > Sachs and Morgan Stanley in two days, over a weekend? > > > > Did algorithms assign Aaa/AAA credit ratings to third derivatives of > > pools of stated-income loans? > > > > Did algorithms put the the full faith and credit of the people of the > > United States behind the liabilities of GE Capital, American Express, > > and a host of other fascist companies that have been allowed by > > corrupt politicians to make one-way bets on the backs of present and > > futures generations of taxpayers? > > > > Might it just be that all of us who love our families and children, > > who understand the economic importance of competition and free > > markets, have better objects of concern at the present moment than > > algorithmic trading? > > > > Sheesh. > > > > I guess the Romans proved that bread and circuses really do work. > > > > > > > > > Considering the sheer volume of trades/orders generated by algos a > > > tool to monitor what is going on will be necessary. It can't be done > > > by humans or who would bare the cost? I believe its the lack of > > > tools and the evolution of this type of trading that is way ahead of > > > the ability to monitor what these algos are doing. They are > > > unpoliced and probably will be for sometime. > > > > > > > Indeed, in my point of view > > > > > > > > The algorithms must not be controlled by algorithms, but the > > > > market monitoring or risk management that should be a completely > > > > independent infrastructure. > > > > > > > > > > > > Regards > > > > > > > > Jaime Romanini > > > > > > > > > > > > > > > > > It's an interesting, and reasonable, question, but it doesn't > > > > > make sense to position this as a problem with the experience > > > > > level of the users of the algorithms - it seems to me that this > > > > > is more a question of needing better risk management > > > > > capabilities on the side of the systems that are interacting > > > > > with the algorithms. > > > > > > > > > > > May 7, 2010 Katherine Heires @ securitiesindustry.com > > > > > > > > > > > > While trading algorithms are regularly praised for their speed > > > > > > and efficiency, a growing contingent of professional traders, > > > > > > financial engineers, consultants and academics say they are > > > > > > being misused, or are faulty from the start. Their answer? > > > > > > Establish best practices and increase training to keep > > > > > > algorithms from doing more damage than good. > > > > > > > > > > > > The impetus for the movement is the fear that the availability > > > > > > of sophisticated trading strategies to a wider audience with > > > > > > varying levels of expertise could cause havoc in the markets-- > > > > > > and already has, in the view of many.(...) [You can unsubscribe from this discussion group by sending a message to mailto:unsubscribe+100932...@fixprotocol.org] -- You received this message because you are subscribed to the Google Groups "Financial Information eXchange" group. To post to this group, send email to fix-proto...@googlegroups.com. To unsubscribe from this group, send email to fix-protocol+unsubscr...@googlegroups.com. For more options, visit this group at http://groups.google.com/group/fix-protocol?hl=en.
