Normally a grind, or steady bid/offer spread. The below batten is also relevant of the widening sell/buy spreads. High Frequency Trading (computer algorithm) is here to stay, you can't deal with it, don't trade in the markets. Or lean to adapt and wait for cues of how to make money when the system overloads and panics (like human/s) and and causes a sell dislocation order go through; knocking out institutional (major banks/pensions funds/larger brokerage firms) longs positions in the process. Eventually this will happen, much like the May 6th 2010 Flash Crash. But with wider consequences as commodity markets (reaching bubble status) crash in tandem with equities.
Remember the golden rule for an eventual (financial or otherwise) disaster: it is small coincidences that build up to an major event.
Good to watch for unusual trading pattens tail end of Jan 2011 and related news i.e environmental/climate, geopolitical, food inflation/tensions etc
Go to this link from
Wired Magazine on Algorithmic trading (early article Dec 2010)
Hello,
ReplyDeleteHi - Great post. For once, I'm speechless! You said it all very well. looking forward to your future posts.