Re: <nettime> The secret financial market only robots can see

[Armin Medosch <armin@easynet.co.uk>]

On 09/30/2013 01:12 PM, Felix Stalder wrote:
> OK. It's the machines. You convinced me. Now, what?
>
> Felix

silent chuckle ...

I wanted to throw in my 2pence already a while ago. Last year I had
the opportunity of investigating the matter journalistically, through
a series of interviews, and I was lucky to find a couple of insiders
who would talk.

In principle, it is important to differentiate between different forms
of algorithmic trading. There are on one hand, large investment banks
and hedge funds who hold large portfolios of different types of stocks
and equities; they also need fast computers and fast lines, but just
because they need to keep track of lots of different positions and
their relations to each other - together with news and lots of other
things happening in real time;

those are the companies who employ Quants, people with high level
mathematical and/or theoretical physics knowledge to design the
software and the 'products' traded, but the trading itself is not
really high-frequency, the final decisions are still made by humans
and there are a number of trades a day or even more, but nothing
approaching nano-second stuff.

High Frequency Trading is a special case of algo-trading and that
really is a world of its own; according to one insider, the big
investment banks and hedge funds are not really good at it at all,
because it is based on a different mentality - very much a kind of
nerd / hacker type mentality - so that mostly new companies are doing
it who follow this special mindset. the algorithms used are relatively
simple, you don't ned the brain of a quant to write one, but it has
to be very reliable; the strategies applied are aiming at very low
risk as opposed to the risky 'over the counter' deals of hedge funds;
software base is mostly Linux and open source and the entry level
for firms relatively low; my source claimed that HFT was actually a
'democratization' of speculation, because in a few years everybody
would be able to do it.

I was also surprised to learn about conditions in this industry. You 
could say that this was a kind of Fordism of financialism, where you 
have very few analysts but many coders and data base maintainers; they 
are all employed with 38 hours jobs, lots of holidays and on the job 
training and, while salaries are higher than almost everywhere else, 
they are very much lower than totally out of poportion bankers' boni.

This just confirms that there is a general tendency in society to 
mystify the workings of machines, whereby the commodity fetishism 
applied to machines just conceals the real mechanisms of social power as 
carried out by people, corporations, powerful interest groups. HFT is 
not that bete noir of banking as what it has been protrayed by some. If 
it is a good thing I dont know and have serious doubts about the 
'democratization'.

Well, yes, maybe there are 'epistemological spaces' in those nano-second 
trades that are inaccessible to humans, but so-what? There are probably 
also inaccessible epsitemological spaces in the vast amount of data 
collected by NSA and others (something that Virilio suggested in Vision 
Machines).

The point is that while we can fret about 'inhuman' thought structures 
philosophically, precious life-time and energy is NOT spent on 
uncovering or countering the doings of those less than 1 % who ruin the 
planet for all, as Brian pointed out.

there is a philosophical aspect to that discourse on umans/non-humans 
that has someting to to with Virilio, Latour and Barad which I would 
love to elaborate on more now, but unfortunately I have some other work 
to do today in order to 'earn a living' as the saying goes

best
Armin





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