AP Twitter Hack Reveals Just How Broken Our Markets Really Are

A brief glimpse of the future
Tuesday, April 23, 2013, 2:16 PM

Two themes that we've been consistently stressing over the past several years were beautifully illustrated today, courtesy of a hacked AP Twitter feed.

They are:

  • Our markets are broken (courtesy of High Frequency Trading, or HFT, computers), and
  • When things finally shift, they will do so at a speed that will shock us.

But first, the hacked AP Twitter feed... » Read more


Eric Hunsader: Investors Need to Realize the Machines Have Taken Over

The blink of an eye is a lifetime for HFT algos
Saturday, October 6, 2012, 1:24 PM

In the blink of an eye, the market moves what used to take humans thirty minutes.

High frequency trading (HFT) deeply concerns Eric Hunsader, founder of Nanex. He worries that today's investors, our regulators heck, even the HFT algorithms themselves don't fully understand the risks market prices face in the brave new era of bot-dominated trading.

For instance, Hunsader estimates that HFT algorithms are responsible for 70%(!) of all completed transactions on our exchanges, and for 99.9%(!!!) of all exchange quotes.

The pictures of trading floors you see on TV, where the people in bright jackets appear frantically busy in making their trades, have no bearing claims Hunsader on the actual trading action. The real action happens across fiber-optic cables, on racks of servers in cooled rooms, where an arms race defined by cable length and switching speeds is being waged

The reality is that the machines have taken over. » Read more