Comments on: The Day the Machines Broke … or Something http://www.hedgeworld.com/blog/?p=960 A look behind the hedge fund curtain Wed, 19 Jun 2013 12:54:35 +0000 http://wordpress.org/?v=2.6 By: TraderLexx http://www.hedgeworld.com/blog/?p=960#comment-4481 TraderLexx Fri, 07 May 2010 12:16:58 +0000 http://www.hedgeworld.com/blog/?p=960#comment-4481 This was no "fat finger" error. This was HAL9000 taking over and killing everyone on the ship. Its not man vs machine anymore. Man is irrelevent, except that Man is managing risk, and when the machine vs machine crushes a market, Man is left trying to decide if his is going to responsibly manage his risk. However- there's a problem- after Man is closed out of is carefully calculated investments, he can't get back into all those positions quick enough to not feel the pain of the forced execution. John Q Public got raped yesterday. His 401k took a beating. Far worse than necessary or caused by the genuine economic problems in the market. HFT must be stopped. Algorithms must not be allowed to wire in and trade for themselves. Or before long- you'll have zero long term players in this market. This was no “fat finger” error. This was HAL9000 taking over and killing everyone on the ship.
Its not man vs machine anymore. Man is irrelevent, except that Man is managing risk, and when the machine vs machine crushes a market, Man is left trying to decide if his is going to responsibly manage his risk.
However- there’s a problem- after Man is closed out of is carefully calculated investments, he can’t get back into all those positions quick enough to not feel the pain of the forced execution.

John Q Public got raped yesterday. His 401k took a beating. Far worse than necessary or caused by the genuine economic problems in the market.

HFT must be stopped. Algorithms must not be allowed to wire in and trade for themselves. Or before long- you’ll have zero long term players in this market.

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