Posts Tagged ‘unfair advantage’

Rise of the Machines

Rise of the Machines

the terminatorCourtesy of Tim at The Psy-Fi Blog

High Frequency Trading

Proponents of high frequency trading tell us that they’re doing us all a service by improving liquidity in markets, which supposedly benefits everyone. However, to implement their strategy they’re prepared to pay a fee to get microscopically early access to prices. So, if you take the liquidity argument seriously, this suggests that these altruistic traders are paying stockmarket operators to give the rest of us a free ride, out of the kindness of their hearts.

Presumably no one really believes this. However, the trouble is that the rise of the machines exposes the fragile markets of the world to yet another possible source of mass extinction. Time for the Terminator. Again.

Automated and Algorithmic

The concept behind high frequency trading is simple. Practitioners pay a fee to markets to get access to real-time data a tiny fraction ahead of everyone else and then hugely powerful computer systems driven by automated trading software search out short term pricing anomalies and seek to exploit them.

Hidden deep behind this is the idea that although stock prices theoretically follow a random walk – which essentially means that a stock’s price in future is not predictable from its price now (which would thus instantly invalidate a thousand trading strategies) – there is evidence of autocorrelation in markets which says that this isn’t quite true. As Campbell, Lo and MacKinley put it in The Econometrics of Financial Markets:

"The fine structure of securities markets and frictions in the trading process can generate predictability. Time-varying expected returns due to changing business conditions can generate predictability. A certain degree of predictability may be necessary to reward investors for bearing certain dynamic risks."

It may be a wild shot in the dark but I’m guessing the authors think that there may be some predictability in market behaviour. The evidence they quote supports them.

Short-term trading techniques aim to exploit this asymmetry in markets. However, the ultra-fast reaction times of the latest market networks and the power of the supercomputers employed has changed the rules. These systems give the high frequency traders a tiny and fleeting advantage over other market participants. Tiny and fleeting, however, can be enough to make lots and lots of money if you do it often enough.

Supercomputer with drives


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Phil's Favorites

Jumping the SPAC

 

Jumping the SPAC

Courtesy of Scott Galloway, No Mercy/No Malice, @profgalloway

Note: I was not under influence of Zacapa or edibles writing this one … so it’s wonky.  Oh well, my blog.

A perfect storm may be brewing: tech, software as a service (SaaS), and climate change. My podcast co-host, Kara Swisher, believes the first trillionaire will be an entrepreneur who addresses climate change. It’s not unthinkable, as Elon Musk is already 15% of the way there — to a trillion in wealth, not solving climate change. I’m more skeptical and believe the only entities that can begin to reverse climate change are the EU and the governmen...



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Zero Hedge

Elon Musk's China Ass-Kissing Tour Has Resumed

Courtesy of ZeroHedge View original post here.

With interesting questions now being raised about Tesla's sales in China seemingly not matching official insurance data for registrations, Elon Musk is continuing his Chinese ass kissing tour that he began earlier this year.

In a forum on Friday, Musk praised Chinese automakers - also known as Tesla's competition - as “the most competitive in the world”. Musk also said China had "great potential" as a nation for elect...



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Biotech/COVID-19

Delta is tempting us to trade lives for freedoms - a choice it had looked like we wouldn't have to make

 

Delta is tempting us to trade lives for freedoms — a choice it had looked like we wouldn’t have to make

shutter_o/Shutterstock

Courtesy of Peter Martin, Crawford School of Public Policy, Australian National University

Last year COVID-19 seemed simple. It was horrific, but the arguments about what to do were fairly straightforward.

On one side were people rightly horrified by its rapid spread who wanted us to stay at home and stay away from school and work and socialising in order to save lives.

On the other side were people concerned about the costs of those measures — to jobs, to educati...



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Politics

Political orientation predicts science denial - here's what that means for getting Americans vaccinated against COVID-19

 

Political orientation predicts science denial – here’s what that means for getting Americans vaccinated against COVID-19

Protesters at an anti-vaccine rally in Pennsylvania in August 2021. Weaver/SOPA Images/LightRocket via Getty Images

Courtesy of Adrian Bardon, Wake Forest University

Vaccine refusal is a major reason COVID-19 infections continue to surge in the U.S. Safe and effective vaccines have been available for months, b...



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Digital Currencies

Animal Spirits: Crypto's Gateway Drug

 

Animal Spirits: Crypto’s Gateway Drug

Courtesy of Michael Batnick

Today’s Animal Spirits is brought to you by YCharts

On today’s show we discuss:

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Chart School

Gold and Silver Volume Waves Review

Courtesy of Read the Ticker

The sign says it all. The professionals want the public to focus on the words, to scare out the weak hands, but the color of the sign underlines the value in a money printing world, its gold stupid.

Point and figure (PnF) charts draw price waves with the sum of volume per wave. PnF charts high light true accumulation underneath price action. This is why Richard Wyckoff favored PnF charts.    

In the charts below we see price moving sideways to down, yet volume on up waves are greater than volume on down waves. At the moment there is no heavy selling on down waves. Or in other words price is being moved down at a low volume expense to allow accumulation at a lower price.

This action represents professionals building their...

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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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