

High-Frequency Trading Created Fascinating Patterns During "Flash Crash" - terra_t
http://www.nytimes.com/2010/08/23/business/23flash.html?src=me&ref=business

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wglb
Tantalizing, but too full of statements like "high frequency traders move so
fast that regulators cannot keep up", which is nonsense. So HFT moves in
milliseconds and regulators move in, what, months? (Worse, if you read _The
Big Short_ , or his editorial in NY Times).

The hint that someone is trying a denial of service attack is intriguing. A
theory was proposed about how quotes were time-stamped as they exited a queue
rather than when entering the queue, causing an unfortunate feedback
situation.

So we are wondering if there is a connection between that and these patterns.

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terra_t
my guess is that the market looks like that all the time -- the things it
describes sound like reasonable automated market-making strategies that people
would try.

market making is certainly a job that needs doing, and high-frequency trading
is a way that people can do it; like any system, there's some risk of a
breakdown. it's a game like poker, where you've got to guess what the
intentions of the other guy are.

honestly I'm not worried about the high-frequency traders, I'm worried about
the longer term expectation that investors have, and about a general inbalance
between capital that exists on paper and the ability of the system to put it
to work

