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Re: kyrie717 post# 91941

Thursday, 01/07/2016 11:09:38 AM

Thursday, January 07, 2016 11:09:38 AM

Post# of 92948
kyrie, EXACTLY. Couldn't have said it better myself.

I think the part most overlooked is how incredibly freaking complex and advanced "Wall Street" has become relative to Joe Q. Public

They employ the finest mathematics grads out of MIT, Cal-Tech and similar. One would ask, "Why the freak would Wall Street be hiring dude's/ladies who just graduated with obscure degrees in math with maybe a minor in quantum physics?"

Because those grads are in back rooms writing algos (algorithms) for as you stated, COMPUTERS to do these "deals/trades" that most, even the fund owners/managers themselves, the SEC, the floor traders DO NOT EVEN FULLY UNDERSTAND, LOL !! They just know that somehow these "ghost in the machine" programs end up making money (most of the time) and so they roll with um.

This isn't "old Wall Street" anymore- with some guy standing on the floor and looking at prices posting on a board, as simple buy/sell orders are shouted in (picture the movie Trading Places with Dan Akryoid and Eddie Murphy)- it's light speed "algos" now on some of the most sophisticated computer networks to ever exist, and they operate across the globe, across currencies, 24/7, 365 days etc.

I've read articles about the "fear" of even the SEC and the FED and others - that NO ONE even fully knows how all this "stuff" works and what might happen in the event of an algo triggered collapse. That's what created some of the recent "braking programs" being installed- where the FED or Wall Street big wigs can literally "throw a switch" and halt the market (China just did it again yesterday) in case the robot algos all decide to all "go short" and sell as the entire market spirals into some "bot" driven mass collapse, because each algo decided that was the most "profitable" trade and path to take at that moment in time.

So this ARBITRAGE thing is waaaaay freaking more complicate IMO than what anyone at a "retail" level can ever understand. It's not simply buying some shares at price X and then hoping to sell them for the $8.50 and make the spread. That's the fundamental concept- but it's waaaaay more freaking complicated and can involve leverage (borrowed, dirt cheap borrowed piles of money) probably overseas currency "spreads", taking up short positions in perhaps Astellas while buying OCAT share, derivatives, and a bundle of other "stuff" that takes a literal math genius to even begin to understand.

https://www.youtube.com/watch?v=2u007Msq1qo



NEW, versus the OLD way, LOL !!


https://www.youtube.com/watch?v=RLySXTIBS3c


Posts contain only my amateur opinions, personal views and thoughts. I discuss stocks as a hobby only. Always do one's own due diligence before investing.

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