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View Diary: Krugman On "The Joy Of Sachs," As Frontrunning Truths Emerge (292 comments)

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  •  you dont (14+ / 0-)

    you dont understand frontrunning.

    Also these companies understand the value oif the micro second.  many used to be across state or further, No wthe are literally right next door to the servers.  Ping rates are almost instantaneous.

    Front running doesnt require a human to do anything.

    (regarding the bank mess) They want to cure the patient but not deal with the disease.

    by dark daze on Fri Jul 17, 2009 at 10:48:22 AM PDT

    [ Parent ]

    •  also (7+ / 0-)

      I wouldn't be surprised if Goldman Sacks had software directly ON the important server/machine central database.

      If you think goldman's connection is further than 50 feet of wire from the server, I think we'd all be surprised.

      Also, it should be noted, that distance doesn't only apply to GS.  ALL traders have to account for distance, so GS just has to be closer/faster than it's competetors, so it's still a game of microseconds.

      •  50 feet? (0+ / 0-)

        Let's assume they all go through a pretty big switch.  From first servers, to the best fiber-optic switch to a mainframe server you've got to be talking even at best several hundred microseconds.

        •  and they all moved right next (1+ / 0-)
          Recommended by:
          neroden

          and many of them moved just because of this.

          (regarding the bank mess) They want to cure the patient but not deal with the disease.

          by dark daze on Fri Jul 17, 2009 at 11:54:17 AM PDT

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          •  example (2+ / 0-)
            Recommended by:
            kurt, Cassandra Waites

            we are running the same software package, the software triggers a buy order, If i get there before you I get a better price especially when talking these macro huge companies.  That means EVERYTHING

            (regarding the bank mess) They want to cure the patient but not deal with the disease.

            by dark daze on Fri Jul 17, 2009 at 11:57:39 AM PDT

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            •  In the timeframe of microseconds? (0+ / 0-)

              Idiocy.

              Have you ever programmed a computer?  Shit dude, the compiler you use will make a difference of more than a microsecond in a few dozen lines of code.  The optimizations you use, the size of code, the way you check data...

              Sure you can make a buy order, but how much do you buy?  Do you have the resources to buy that much?  Does your server have to talk to any other servers to ensure that you aren't buying more than you can raise funds for?

              Game, set, and match dude.  You haven't got the physics, engineering, or computing power of your competition.

              And even with a really serious gaming machine, with a very high-speed 50MB fiber-line, from the time I hit "send" to the time this shows up on the DKos server will take a very significant fraction of a second AT THE VERY LEAST.

              •  you still dont get how (1+ / 0-)
                Recommended by:
                kurt

                you dont get how wallstreet works, thats what you miss.

                Sure you can make a buy order, but how much do you buy?  Do you have the resources to buy that much?  Does your server have to talk to any other servers to ensure that you aren't buying more than you can raise funds for?

                wtf are you talking about?

                you may know something about the internet, you know nothing about the market.

                (regarding the bank mess) They want to cure the patient but not deal with the disease.

                by dark daze on Fri Jul 17, 2009 at 12:08:01 PM PDT

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                •  And you know nothing about reality. (0+ / 0-)

                  Thanks for proving how a little bit of knowledge is a dangerous thing.  You have just enough of it to be a danger to yourself- I know enough about markets and enough about the real world to appreciate that you can't admit how totally wrong you are, and can't back off where you've been hammered.

                  So you continue to fight, despite being ridiculously outgunned.

              •  get over the micro second (2+ / 0-)
                Recommended by:
                kurt, Cassandra Waites

                get over the micro second arguement only you with yourself is having.

                MIcro/Milli it doesnt matter, what matters is "the fastest wins and gets the prize"  

                (regarding the bank mess) They want to cure the patient but not deal with the disease.

                by dark daze on Fri Jul 17, 2009 at 12:13:24 PM PDT

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              •  Um, counting *in* microseconds doesn't mean (3+ / 0-)

                That "one microsecond" is the size you're working with.

                It just means that you're working with numbers less than one millisecond.  Given that the difference between your timing and your competitor's timing is what matters, this means the actual timings can be many milliseconds.

                -5.63, -8.10. Learn about Duverger's Law.

                by neroden on Fri Jul 17, 2009 at 12:52:35 PM PDT

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          •  And again, microseconds? (0+ / 0-)

            I don't care if they are on the same floor, in the same building.

            It means squat.  A server will not differentiate between data coming in from one source to another unless the header shows a difference.  That header will take even with the fastest (got you on another point) server money can buy (because this information is sent SERIAL) in milliseconds, not microseconds.

            Another problem is the amount of bandwidth a system can handle.  Even the best 10GB routers will require a millisecond to receive a thousand bytes.  Most operating systems can't handle this speed.  So they don't bother.

            •  you dont get (2+ / 0-)
              Recommended by:
              kurt, Cassandra Waites

              you dont get how the financial sytem operates is what you are missing.  

              (regarding the bank mess) They want to cure the patient but not deal with the disease.

              by dark daze on Fri Jul 17, 2009 at 12:03:46 PM PDT

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              •  Bullshit (0+ / 0-)

                And total idiocy.  

                This isn't Harry Potter, even the best Wall-Street bankers can't beat the laws of physics.  No matter how much power you ascribe to them, they can't do what you think they can.

                You've been schooled.

                •  lol (0+ / 0-)

                  ok pal,   LOL.  You get in a puff about millisecnd and mico second and now you now understand wallstreet inside and out.

                  Go make yourself a few billion if you understand how trading works, because that is what Goldman is doing.

                  But hey, you built a gaming rig a few years back so you know everything.

                  (regarding the bank mess) They want to cure the patient but not deal with the disease.

                  by dark daze on Fri Jul 17, 2009 at 12:10:11 PM PDT

                  [ Parent ]

    •  I understand. You don't!!! An electrical pulse (0+ / 0-)

      can't travel more than the distance between two adjacent buildings in that time frame.  So any information coming from anywhere further than the nearest block is slower than a microsecond.

      The speed of light is 300,000 kilometers per second.

      In a millisecond, a ping CAN'T TRAVEL MORE THAN ~30 meters.

      You don't understand physics.  

      And that is why I brought this up, because people think they know what they are talking about when they are often bugfuck wrong.

      In 1 microsecond, the best servers on earth still can't move a signal more than the distance of a large conference room.  But all you geniuses think it matters.

      And you are all wrong.

      •  its all relative (5+ / 0-)

        its all relative.

        A bear starts chasing two friends, the one friend says, why we running?, we cant out run a bear, the other friends says, I know, I just need to outrun you.

        (regarding the bank mess) They want to cure the patient but not deal with the disease.

        by dark daze on Fri Jul 17, 2009 at 11:50:31 AM PDT

        [ Parent ]

        •  But the latency period (0+ / 0-)

          of the decision making process between any two computers is going to be measured in hundreds of milliseconds AT THE LEAST.  They don't have direct connections, communications go hub, to hub, to hub.  The diarist talked about scooting packets around, well each packet will contain (I see you've done that too) so many headers and checksums that it takes quite a while for the computer to get the signal.

          In essence, this is such total bullshit.  Introducing the concept of microseconds shows a total lack of understanding of basic physics.

          •  its realitive (1+ / 0-)
            Recommended by:
            kurt

            they need only to beat other companies packets by milliseconds, or other orders etc.

            Microseconds is not bullshit, it what is dividing who gets to stand where in line.

            (regarding the bank mess) They want to cure the patient but not deal with the disease.

            by dark daze on Fri Jul 17, 2009 at 11:59:39 AM PDT

            [ Parent ]

          •  right (0+ / 0-)

            of the decision making process between any two computers is going to be measured in hundreds of milliseconds AT THE LEAST.  

            and those with the best cleanest networks win, and the reward can been incredible.

            The difference between different houses may be as small as a few micro seconds.

            (regarding the bank mess) They want to cure the patient but not deal with the disease.

            by dark daze on Fri Jul 17, 2009 at 12:01:46 PM PDT

            [ Parent ]

      •  plus (3+ / 0-)
        Recommended by:
        KenBee, kurt, Cassandra Waites

        you want to get into packets, and packet switching.

        All it really is, is allowing certain packets to cut in the line, thats front running.  Even though the packet may have been created a millisecond or so after those in front( which actually caused this new packet to be created) the new packet gets to jump in line.

        (regarding the bank mess) They want to cure the patient but not deal with the disease.

        by dark daze on Fri Jul 17, 2009 at 11:52:35 AM PDT

        [ Parent ]

      •  Physics is about 0.05% of the (0+ / 0-)

        overall time that it takes to connect two points in communication on modern networks. Routing, colocation, packet prioritization, and system speed are all infinitely more important.

        -9.63, 0.00
        c a p i t a l i s m . . . K I L L S .

        by nobody at all on Fri Jul 17, 2009 at 01:52:11 PM PDT

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        •  Exactly!!!1 (0+ / 0-)

          Notice how nobody has rec'd your statement or mine?

          People aren't interested in reality, all they care about is their own almost worthless opinions.  They go into shock when they here companies are keeping time in microseconds, when the actual value of that information means nothing.

      •  NB Brooks gave me some information on that (1+ / 0-)
        Recommended by:
        geodemographics

        in a diary I did yesterday.  This may help.

        Lambert on Correntewire.com linked to the detailed analysis by Themis Trading, Toxic Equity Trading Order Flow on Wall Street: The Real Force Behind the Explosion in Volume and Volatility, by Sal L. Arnuk and Joseph Saluzzi. Quotes:

         

        . . . electronic trading, the new for-profit exchanges and ECNs, the NYSE Hybrid and the SEC’s Regulation NMS have all come together in unexpected ways, starting, coincidently, in late summer of 2007.

           This has resulted in the proliferation of a new generation of very profitable, high-speed, computerized trading firms and methods that are causing retail and institutional investors to chase artificial prices. These high frequency traders make tiny amounts of money per share, on a huge volume of small trades. . . .

           This paper will explain how these traders – namely liquidity rebate traders, predatory algorithmic traders, automated market makers, and program traders – are exploiting the new market dynamics and negatively affecting real investors. We conclude with suggestions on what can be done to mitigate or reduce these effects. . . .

           High frequency trading strategies have become a stealth tax on retail and institutional investors. While stock prices will probably go where they would have gone anyway, toxic trading takes money from real investors and gives it to the high frequency trader who has the best computer. The exchanges, ECNs and high frequency traders are slowly bleeding investors, causing their transaction costs to rise, and the investors don’t even know it.

        The Democrats are the new Republicans. Congressional Corporate Whores peeing on our shoes and telling us its raining.

        by Badabing on Fri Jul 17, 2009 at 04:46:57 PM PDT

        [ Parent ]

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