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Make $377,000 trading Apple in one day (cnn.com)
21 points by T-A 1396 days ago | hide | past | web | 9 comments | favorite

"According to his study, in one day (May 9), playing one stock (Apple (AAPL)), Hendershott walked away with almost $377,000 in theoretical profits by picking off quotes on various exchanges that were fractions of a second out of date."

This is a massive red flag. There's so many things that could be done incorrectly that the result is meaningless if the profits were only theoretical instead of observed.

Yup. Big difference observing an arbitrage opportunity, and executing it.

This is the most poorly written article I've read in a long time. How someone who doesn't understand financial markets gets a job writing for cnn finance website is beyond me.

That is the answer: people who understand the finance industry have jobs in it; CNN hires 'journalists' who write articles after several hours of 'research'; the same as they do for a myriad of other subjects.

So, if this article is beating the war drums to incite people against algorithmic trading, what is a possible result?

In the given example, the trader was just looking for a mismatched bid and sell, then fulfilling ("raping and pillaging") it faster than anyone else.

It's hard for me to imagine what could be improved or changed there.

First, this is an article specifically about High Frequency Trading (HFT), which is just one type of algorithmic trading.

Second, read to the end of the article. It suggests changing the market from a continuous free-for-all to a series of auctions at multi-millisecond intervals. Sounds good to me.

Umm, how do you take advantage of stale quotes with RegNMS; you can't hit a stale bid or offer and then go to another exchange and take the other side of the trade and pocket the spread. RegNMS forces the worse-priced exchange to redirect their order to the exchange with a best offer.

However, best price is determined by the consolidated tape. Are you saying that the consolidated tape could lag and people take advantage of it?

This is a great example of the crap you'll have to put up with from an author who tries to write about something without actually making an effort to understand anything.

The blackjack motif is a joke. Ben Mezrich's Bringing Down the House exposed the world to the power of card counting? Please. Do some research and credit Ed Thorpe, rather than just running with the time you saw '21' in the theater as the background for your article.

I already know from the title that the article is going to be horseshit.

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