The book picks up in the middle of the story after the first step in electronic trading has started, but before all participants are on a level playing field.
Human market makers at those exchanges are entering their quotes(by hand even). And Brad Katsuyama uses new electronic technology to crush them. Taking their entire inventories and moving the markets against them.
The human market makers fight back and make their computers do the market making for them and Brad is hurt because his technology is no longer the best way to trade.
The technology put a lot of people out of work and at the same time eliminated a loophole that wealthy people had to take advantage of the markets.
That is a recipe for vilification.
Think of the wrath of the unemployed truck and taxi drivers that will be aimed at the evil computer programmers and engineers who perfect self-driving cars and trucks. The headlines will be amazing.
Yes. You would be purchasing both stock and the option from "the market."
As much as I like to joke about retiring to some farmers market to handcraft artisanal equity options, when people are talking about options on stocks (equity options) they are normally referring to exchange traded deriviatives.
Because it is not a simple or fair solution to the problem; it is a sophomoric attempt at solving a human problem that simultaneously guts the actual mechanics of exchanges.
You want to make market-making unprofitable and to turn the stock market into your town's real estate market. How easy is it to sell a house? What is an accurate price for your house? At this moment? To the dollar?
This is a really toxic view of consumption. What level of consumption is moral to you? Can I buy a pack of chewing gum if I earn $100k? What if buying a $100k watch is a smaller percentage of my income than that pack of chewing gum?
> In other words, you want to address diversity by stamping out any ideas that are contrary to the modern politically correct BS that most people here are dulled into believing.
My natural reaction to this comment is Plonk.
But I realize that is only perpetuating the problem. I have the luxury of ignoring you. I have the luxury of ignoring whoever I want to. Many people don't.
And maybe that is exactly what you are trying to point out: if we try to solve this by using group consensus to ignore/block/killfile idiots/fools/bigots, what happens 1-on-1.
So in response:
I also have experienced situations where HR doesn't really add anything, but maybe someone can come up with a way to do HR.
A market maker can only stay in business if they sell as much as they buy and if the average sale price is above their average buy price. They lose money if they provide liquidity in the way of market moving forces.
Market makers try to avoid informed and "toxic" order flow and broker flow is guaranteed source of small uninformed orders that are most likely going to be crossing the spread.
IPO opening auctions are scheduled for the middle of the day. The regular market open auction is a very busy time and if they happened at the same time, everyone would be choosing between handling their normal business or the excitement of the IPO.
Long and Medium term investors should be investing broadly across the entire market.
Just a decade ago you needed to buy into a mutual fund and pay sales loads and expense ratios over 1%.
Now, you can own an ETF containing a piece of each of the Fortune 500 companies for an expense ratio < 0.1% because spreads in those 500 companies are narrow and trade constantly.
Medium term and long term investors love HFT because it saves them 0.9% in yearly expenses. If you've got 100k invested in SPY instead of some Fidelity fund, HFT is saving you $900 a year.
Some people call these sorts of charts crop circles. And, like the patterns stomped in wheat and corn fields, some people take one look at them and decide the end is nigh.
"One day a man invents a telescope .... He provides no net-wealth to society as a whole"
Financial incentive drives creation. Programable gate arrays that can keep a limit order book drive sales of the cards. If more cards are sold, they get cheaper. If they are cheaper, they are more accessible for medical imaging.
What impact on the national fiber network has the Spread line had? What has it taught us?
"Fortunately, literacy, though it consumes its own oral antecedants and, unless it is carefully monitored, even destroys their memory, is also infinitely adaptable. It can restore their memory, too." Ong, Walter J.. Orality and Literacy. New York: Routledge, 2003: 15.
We need not limit our knowledge and view of the world to what fits in our brain. We do, however, need to make sure that what we are putting into our brain is useful to ourselves and to humanity; Up-Up-Down-Down-Left-Right-Left-Right-B-A-Start.
Human market makers at those exchanges are entering their quotes(by hand even). And Brad Katsuyama uses new electronic technology to crush them. Taking their entire inventories and moving the markets against them.
The human market makers fight back and make their computers do the market making for them and Brad is hurt because his technology is no longer the best way to trade.