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Flash trading, black boxes, high frequency trading, HFT, algo based trading system causes that 600 drop in the market

(Last Updated On: May 19, 2010)

Flash trading, black boxes, high frequency trading, HFT, algo based trading system causes that 600 drop in the market

For those that don’t klnow, high frequency trading has lately taken the stock markets by storm. It is quite astonishing in how you read that over seventy five percent of all trading is done by one of these robots. It was predicted over five years ago. Also, do you ever wonder why the stock market has been on a real tear up lately? Not many people will openly talk about it in the mainstream media, but this is what is driving the markets.

When you hear about investment banks like Goldman Sachs reaching over $150 million days in profit (not a typo!), what do you think is driving it? Goldman Sachs did not hire thousands of trained monkeys to do trading for them. It was not done by ghosts. It was simply (well not so simply) run by algo based robots which trade on trends. They have been programmed to get in out and out of trades within 10 milli seconds. They can also execute multi session trades in the thousands. This technology is what spawned this site. The learning of it is quite complex but we are working on an infrastructure that could match the biggest of any big investment bank. This is also how the big hedge fund companies trade. As said, we aready to match them.

So what are our limitations? Well, we don’t have the capital scale or hardware budget to match their systems that execute huge flash trades in the thousands. Reports have come in with a 1000x performance level and near true ZERO latency. Could we get there? Well….one day.

By the time that happens, they will be on their way to spending millions on these FPGA hardware based systems where they will be able to blend market news capture, economic sentiment via feeds that will be fed into these huge super grid computers. They will cost millions which us little guys cannot afford. Well maybe if we do real well. I mean real well on a Warren Buffet level
So what do you think caused that 600 point drop again? Think again. Oh yeah, the government won’t be able to regulate it. Who do you think brings in the liquidity into the markets to make them gel? Now who’s your daddy??

NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

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