Are you confused? At this point, we've been exposed to so many conflicting ideals and "facts" that it's hard to know anything.
For example, if I asked you "Who was the smallest spending president since Eisenhower?" - What was the first name that came to your mind? Did you guess Barack Obama? Well, according to this Forbes article, that may be the correct answer.
In a situation like this, many dispense with facts in favor of beliefs.
As a trader, I believe the market tips his hand by showing how it responds to news. When good news is met with selling, that tells you something. However, when bad news is met with price surges, that tells you something very different.
In this case, the US equity markets are at highs they haven't seen in a decade, despite facing more than a little geopolitical, economic, and political instability.
Doesn't your gut tell you we've seen the low for the year? Isn't there part of you (that wants to argue with your better judgment) saying "Don't fight the Fed" ... ?
It is entirely possible that markets rally hard into the election.
I may not have facts, but sometimes it's easier to hold beliefs than Hope.
Mark Cuban Explains Why High Frequency Trading "Terrifies Him" - But That May Be Why It Interests Him As Well
While talking with traders, one of the topics that keeps coming up is how much the markets and trading have changed recently.
One of the primary catalysts to such change has been the amount and frequency of government intervention and stimulus. Another big driver of change has been the massive shift to algorithmic or program trading. Recently, the piece of this getting the most press and attention is high-frequency trading.
Below is an interesting video where Mark Cuban, Dallas Mavericks owner and high-profile entrepreneur, shares some thoughts about why high-frequency trading terrifies him.
Here is the video. The market related comments start about 30 seconds into the clip.
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Some people may watch that video and assume that high-frequency trading is a bad thing, or something to be regulated and minimized. However, there is another side to the argument.
Let me digress for a moment. If I talked to an entrepreneur, and asked them what the biggest constraint on their business was ... some might say it's the Obama administration and their policies. This is absurd, because they don't have any control (or at least meaningful control) of that supposed constraint. Instead, that is simply a "reality" of the current competitive environment for them and others.
What that means is the thing they control is how they respond to that competitive environment. For some, what they perceive limits their options or thwarts their strategies. For others, it is a catalyst for new action, new strategies, and new ways to win.
So, why is Cuban afraid of high-frequency trading? First, he believes we are likely to see another "flash crash". Second, an increasing percentage of market action is a result of algorithms trying to outsmart algorithms (and he recognizes that the decisions they are making happen faster than humans can respond to our comprehend). As a result, human intervention isn't the answer because any actions would occur too late.
Some people recognize the advantage algorithmic traders are gaining and seek to weaken it (or at least slow it down), while others pull their money out of the market because of their disadvantage and the new risk. Contrast that with those that see the advantage and try to figure out how to extend it or get some of it for themselves.
It's like most things in life, it's not as much about what happens, it's about what you do.
Posted at 07:13 PM in Business, Current Affairs, Ideas, Market Commentary, Trading, Trading Tools | Permalink | Comments (1) | TrackBack (0)
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