The Flash Crash was not inexplicable
It was when it occurred. .
I have explicated why they have happened = dueling algorithms playing "chicken" while exploring liquidity.
Nope. If you go back in this thread at that time I explained it. I've also given detailed explanations on the Yahoo SPY board but that's hard to access. Algos don't "duel". You can't make that claim rigorous. All BBAs generated electronically can't be hit electronically. They have to be matched by a generating member. Before May 6, the update could be sent into auto mode if a parameter, in this case a large order(s), enters the market. Now, the large size must be broken up electronically for execution. This costs time and allows latency to repair the instantaneous state by marshaling resources in the opposite direction.
The algorithms test each other out to see which team is smarter.
Nope. Silly counter productive nonsense that only would increase the negative expected return for the perpetrator. Pretty humorous that you use the word, "team". What is that? A team of computers? Please tell me how such a team could be coordinated in real time. Time cost of interconnection and processing would render the "team" uselessly latent. As for a human team? Impossible due to speed of execution.
Notice that nowhere in this discussion among all these hacks has anyone pointed out the great superficial value provided by electronification. No one can see what's going so within their small and paltry world of distrust there can't be "manipulation".. I've pointed this out many times on this thread and I've shown how neither can there be manipulation in human only systems, e.g., specialists and floor trader models.
The reforms made things worse.
The only "reforms" aside from programming changes were introduction of circuit breakers. The breakers have been predictably useless. In fact, the exchange doesn't want them to be tripped since they make the situation worse, as in how do you start up again.
I was forced to withdraw my flash crash standing orders which were intended to catch flash crashes.
Warning Wil Robinson, your 'crat tendencies are starting to show again.
If my trades at the bottom might be canceled by the authorities because they don't like the price, I had better not offer to buy.
The authorities? They never get on the other side of a trade. Also, no one never knows where price is. This is because price in markets is necessarily random. NECESSARILY.
What's fundamentally wrong is regulators setting the prices.
The stock market is a free market. RE market isn't. The banks fix RE prices No one ever discusses that because most like that the banks do that. In any event no one can regulate the stock market so that any of its prices are fixed. Stock prices asymptotically approach the intrinsic value of the thing they represent, not the price that force can engineer. It isn't possible and never was to "manipulate" stock prices. With a little reason and experience one can see that this conclusion is inescapable. It is for this reason that one should never fear the mechanism of the market per se. Just a process by which one buys or sells. |
