I think you may be mistaken. High-frequency trading is becoming less profitable as an industry, but algorithmic trading in general is most definitely not.
Really? As I understand it the world is quickly becoming saturated and major players are starting to take their chips and leave the table. The risk is quickly catching up to the reward and consolidation into a type of commodity equilibrium is inevitable.
What areas of algorithmic trading are escaping the Great Chill?
"Algorithmic trading" is just a broad umbrella that encompasses any trading system where a computer algorithm is making the trades based upon pre-defined rules. Buying the S&P every Tuesday can be considered "algorithmic trading."
And of course, the answer to your question about which algorithms are working, they are the ones on the opposite side of the trades of the ones that are losing. (Or, alternatively, the ones you can't read about in academic papers or books.)
I am not talking about 'warehouse picking order' style algorithmic trades that are designed to make transactions cheaper or more automated merely for convenience.
Equilibrium is coming.
But that is Ok. Quants can go into material science and model new and useful materials by studying their higher dimensional black hole equivalents [1].
So yields, returns, and inflation are finally stabilizing as the market matures and approaches its "true value"? Nope, because equilibrium is a concept which works well in the natural sciences, but quite erroneous as applied in economics. This is George Soros's argument in his books about the Principle of Reflexivity, which differentiates social systems from natural ones.
What is happening, is merely that trading volume/volatility has tapered off since the '08 crisis. That's expected; empirically, volatility continues to be clustered and autoregressive (a self-exciting process). Its a cycle that will pick up again (one can expect), eventually.
But I am not talking about the level of social systems. Of course the market itself is not approaching equilibrium. But the liquidity enhancement market is. There will always be money to be made there but not the bonanza that's existed up to about two years ago.
But that's mostly due to the much lower volume and volatility (rather than more competition). When its low, so is the demand for liquidity provision. But that demand will come back with the next volatility cycle.
Actually, volatility is only clustered when measured in calendar time. Its much more constant when measured in event/transaction time (plot price against cumulative volume, rather than date/time).
Did you read the article? It discusses the lack of 4G/LTE support for two full paragraph at the beginning...
"It’s as close to perfect as I’ve seen any Android smartphone get. But the Nexus 4 falls just short of perfection due to one major omission: It’s not compatible with any LTE networks... The lack of LTE connectivity will spoil the Nexus 4 for some. But if you don’t mind living without LTE — and you likely currently are, given AT&T and Sprint’s small LTE footprint, and the fact T-Mobile has yet to begin building its LTE network — then the Nexus 4 is a good buy."
Can you explain that situation? As I read it, it goes like this. Someone is willing to buy at $1.50, and someone is willing to sell at $1.60. If an investor comes along that wants to buy right now, he has to buy from the seller at $1.60. But say a HFT quickly throws out a sell order at $1.59, so the investor is now able to buy at $1.59 from the HFT. The investor saved $0.01, and the HFT made a trade he must have wanted. Where is the money being skimmed?
Lets take your example and extended to two investors. One who wants to buy and one who wants to sell. If Bid is at $1.50 and Ask at $1.60 then in an efficient market you can expect the two investors to meet at the middle and make the trade at $1.55. That will not occur. Instead of trading with each other, both investors would trade with liquidity providers who will step in to buy from one investor at $1.51 and sell at $1.59. As a result the investors will get their orders filled at only $.01 better than the expected bid/ask and the HFT guy would make $.08 in pure profit.
In reality this does not occur. What happens is that another HFT guy would step in to offer $.02 to each investor in price improvement and take $.06 in spreads. The next HFT guy tries to shave off a little bit more until the spread narrows to $.01. HFT guys then try to take little bits of that remaining spread with exotic order types, rapidly putting and taking off orders, and other tricks and squeezing more money out becomes increasingly difficult.
Edit: To clarify as per dchichkov comment, because of the competition between HFTs guys, the investors would only see a spread of $.01 or $.02. Thus both would trade around somewhere around $1.55 though not necessarily with each other.
The part about squeezing the very last bit of the performance still stands though. Because of mid peg orders and darkpools there could also be fractional pennies which are almost always collected by HFTs. If you watch the trade tape, you may see trades happening with $.009 and $.001 sub penny amounts. These darkpool are trades where someone offers $.001 in price improvement and takes $.009 from the spread at another venue if they are lucky.
I would wager that it is because when creating named variables, people tend to start with the low integers, like var1, var2, etc... And when using constants, they will often use maximums up to a threshold, like 999.99. So the middle range (5-8) is rarely used.
From a shareholder's perspective, does this mean Barnes & Noble is now, in essence, an e-book reader manufacturer/distributor with a retail presence? And the retail presence just happens to be doing terribly at everything except selling the Nook?
I'm trying to wrap my head around what exactly this means for Barnes & Noble. Any insight would be appreciated!
Hard to say at this point, but I'm not the least bit optimistic. At the rate B&N is burning through cash, Microsoft simply extended their runway an extra three quarters. The fundamental problems with Nook and B&N still exist, so until they announce some compelling change in business direction (other than an app for Win8) I'm not betting on that horse.
But by having people click on those ads, the companies that are advertising (which could be and are companies actively engaged in "physical" products) are acquiring paying customers and thus have greater ability to fund their products.
SpaceX, Boeing, GM, and Victoria Secret need revenue sources to create their 'non-virtual-reality' products, and marketing/advertising creates a revenue source. If they had a net loss from advertising they simply wouldn't do it.
That's definitely partly true. You can't argue that market capitalism doesn't move some resources to useful and productive things.
Maybe you are right and this is just a horrible inefficiency that will be corrected as soon as we figure out how to make ad optimization and ultra addictive time wasting games more efficiently.
It doesn't seem likely to me at all though, the only arguments I've seen for it are just ideological commitments to our current economic/political system.
The statement that modern global captialism is the best system for productive human endevour we have come up with and the statement that modern global capitalism and the systems it will spawn are enough to continue the upward trajectory of civilization are not the same thing.
> If they had a net loss from advertising they simply wouldn't do it.
I have little faith in the non-scientific philosophies that this kind of statement is based on given modern neuroscience and human irrationality. There are too many counter examples. We are not self interested rational actors, it's way more complicated than that.
But I get this feeling, more and more, that big, world changing companies, don't need ads revenue. The number of visits on the internet is less relevant for them.
You picked some companies randomly, but out of them SpaceX and Boeing are not selling stuff over the internet.
There is this hunch, that what we do, doesn't matter. It's mostly self congratulatory friend/social app. Yes, you might make some money out of it from VC but it doesn't change the world.
I have some hope that the maker/3d printer/home fabrication sector could combine the profitable small startup business that we all seem to love with some progress that will actually provide substantial benefit to humanity.
I think we need a lot more time to figure out how to organize and motivate and fund large projects as well as evolve culturally before any interesting large scale space exploration will be done. SpaceX type experiments might be the first step, even if it's just a data point about what doesn't work.
Yes. We could argue that people would still buy tickets even if they weren't available online, since flying beats car / ship traveling even if you have to walk to a store to buy your ticket.
There's a plausible case that advertising is a negative-sum game (in the game theory sense). If no one advertised, they wouldn't be worse off since we would still buy the stuff, but if one player defects and advertises, they gain an advantage so the Nash equilibrium involves wasting lots of money on advertising to no net gain.
That's only because we live in a world that's built around the principles of commerce and capitalism where activities are lubricated by money. There's no reason to expect that the same system exists in alien worlds.
This is the first iteration of my first-ever released project, done over the last week. It allows you to sync your mobile browser to your desktop browser. I hope to expand the product and overall make it easier for people to switch working from their desktop to their mobile phone, and vice-versa.
Technology: Node.js server running on Heroku, connected to a Redis database.
I would appreciate any suggestions, criticism, or improvements!
There are a couple other great apps that do something similar:
http://trns.fr - uses text messages instead of email / mobile bookmarks
http://AirLinkApp.com - one-time bookmarklet generation
