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Dumpshock Forums _ Shadowrun _ Damien Knight is making moves

Posted by: Radical-B Sep 25 2013, 08:54 PM

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/24/traders-may-have-gotten-last-weeks-fed-news-7-milliseconds-early/

As soon as I read this I immediately thought of Knight. I wonder how much longer til Shadowrun is moved to non-fiction

Posted by: Draco18s Sep 25 2013, 08:57 PM

I heard about that on the radio this morning.
The theory I'd heard is that the info the Feds released actually was made public from Chicago, not DC as expected.
(That is, the information spread started in a different place)

Posted by: Tymeaus Jalynsfein Sep 25 2013, 08:57 PM

7 Milliseconds is not enough time to even notice the data, let alone benefit from it. The SR Nanosecond Buyout notwithstanding... *shrug*

Posted by: Sendaz Sep 25 2013, 09:06 PM

I have long argued that the stock market in it's current incarnation is just number manipulations on a number of levels that do not even reflect reality most of the time.

Just another sign it needs to be overhauled.

And where were you, TJ, while this was going on?

Posted by: Tymeaus Jalynsfein Sep 25 2013, 09:41 PM

QUOTE (Sendaz @ Sep 25 2013, 02:06 PM)

I was...... working... yeah, working...

Posted by: KarmaInferno Sep 25 2013, 10:24 PM

QUOTE (Tymeaus Jalynsfein @ Sep 25 2013, 03:57 PM)

7 Milliseconds is not enough time to even notice the data, let alone benefit from it. The SR Nanosecond Buyout notwithstanding... *shrug*

High frequency trading companies conduct sometimes thousands of trades a second. The firm my brother works for just spent several million dollars on a new fiber cable link because it will shave three milliseconds off their latency for that particular market, giving them a slight edge over their competitors.

Human beings don't even make the trades in those systems anymore. It's entirely automated, computers monitoring stocks for even tiny variances from projected prices, buying and selling at blinding speeds. The humans just make sure the machines are running and come up with the predictive algorithms that drive the trades.

Seven milliseconds is plenty of time for a good chunk of financial damage to happen in today's market, if it happens at the right time.

QUOTE

Markets swung rapidly on the 2 p.m. announcement last Wednesday, with stocks, bonds, and the price of gold all skyrocketing. Somebody placed massive orders for gold futures contracts betting on exactly that outcome within a millisecond or two of 2 p.m. that day -- before the seven milliseconds had passed that would allow the transmission of the information from the Fed's "lock-up" of media organizations who get an early look at the data and the arrival of that information at Chicago's futures markets (that's the time it takes the data to travel at the speed of light. A millisecond is a thousandth of a second). CNBC's Eamon Javers, citing market analysis firm Nanex, estimates that $600 million in assets could have changed hands in that fleeting moment.

And it looks like that's exactly what happened.

-k

Posted by: Ryu Sep 27 2013, 08:40 PM

There are also ways to make latency less of an issue, one that combines well with runs: http://www.rollingstone.com/politics/blogs/taibblog/16-major-firms-may-have-received-early-data-from-thomson-reuters-20130905

Posted by: Tymeaus Jalynsfein Sep 27 2013, 09:44 PM

I was commenting more upon the premise of the article, which was that the data was transmitted 7 Miliseconds early. Of course, had that information transmitted via Wireless, well, then maybe a lot more people could have benefitted, since it would have obviously transmitted faster in that medium.

Posted by: Draco18s Sep 27 2013, 10:15 PM

"7 milliseconds early" has to do with how much earlier the data WOULD have to have been sent in order for the machine in Chicago to have been able to make the trades that it did, assuming that it traded on the information contained in the release.

Posted by: Backgammon Sep 28 2013, 01:45 AM

QUOTE

On August 1, 2012, a software problem at Knight led to millions of unintentional orders flooding into the market over a 45-minute period, leaving the firm with a huge position it had to unload at a total loss of $461.1 million.

Full story: http://www.reuters.com/article/2013/09/26/us-kcg-settlement-trading-idUSBRE98P0VI20130926

With http://www.bloomberg.com/news/2013-09-13/market-disruption-seen-sign-of-times-after-nasdaq-mishap.html pretty nicely summarizing the state of the stock market right now, following several recent shutdowns due to glitches