Re: nettime The secret financial market only robots can see
Felix: What has happened through financialization is not the rise of machines, or some creation of intelligent forms of agency beyond human comprehension. Who said any of this is beyond comprehension? If you choose to not even try to understand something, for your own reasons of *dogma* (such as SCOT), the initial reasons for which have long been forgotten, then what does that tell us about forms of agency? It is the machines that are *spying* on us -- not humans. It is the machines that are taking our jobs -- not humans (now that wage arbitrage is declining). As George Dyson illustrates in his Turing's Cathedral: The Origins of the Digital Universe, something *qualitatively* different has been invented. Why is that so difficult to grasp? Mark Stahlman Brooklyn NY # distributed via nettime: no commercial use without permission # nettime is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: http://mx.kein.org/mailman/listinfo/nettime-l # archive: http://www.nettime.org contact: nett...@kein.org
Re: nettime The secret financial market only robots can see
OK. It's the machines. You convinced me. Now, what? Felix On 09/29/2013 02:34 PM, newme...@aol.com wrote: It is the machines that are *spying* on us -- not humans. It is the machines that are taking our jobs -- not humans (now that wage arbitrage is declining). # distributed via nettime: no commercial use without permission # nettime is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: http://mx.kein.org/mailman/listinfo/nettime-l # archive: http://www.nettime.org contact: nett...@kein.org
Re: nettime The secret financial market only robots can see
On 29/09/13 14:34, newme...@aol.com wrote: It is the machines that are *spying* on us -- not humans. It is the machines that are taking our jobs -- not humans (now that wage arbitrage is declining). So if we switch them off, all associated problems go away? As George Dyson illustrates in his Turing's Cathedral: The Origins of the Digital Universe, something *qualitatively* different has been invented. Qualitatively different than/from what, exactly? Why is that so difficult to grasp? Perhaps because it is qualitatively different? m # distributed via nettime: no commercial use without permission # nettime is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: http://mx.kein.org/mailman/listinfo/nettime-l # archive: http://www.nettime.org contact: nett...@kein.org
Re: nettime The secret financial market only robots can see
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 # distributed via nettime: no commercial use without permission # nettime is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: http://mx.kein.org/mailman/listinfo/nettime-l # archive: http://www.nettime.org contact: nett...@kein.org
Re: nettime The secret financial market only robots can see
Doug Rushkoff has spoken of the architecture of Lower Manhattan coming to resemble that of a microprocessor. The gates keep becoming more tightly packed; for every meter you move closer to the Valhalla (old Verizon co-lo facility at 375 Pearl st.), you are one nanosecond closer to perfect insight. Or so they think. On Mon, Sep 30, 2013 at 9:07 AM, Armin Medosch ar...@easynet.co.uk wrote: 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. ... # distributed via nettime: no commercial use without permission # nettime is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: http://mx.kein.org/mailman/listinfo/nettime-l # archive: http://www.nettime.org contact: nett...@kein.org
Re: nettime The secret financial market only robots can see
Thx 2 Armin for an elegant summation on the range of eletronic trading sytems and methodologies. A lot of very excellent posts to this thread. To Brian's point on the relative applicability of this financial approach, I think by looking at total volumes across all asset classes, perhaps specfically CME Globex, its quite apparent from that data that the levels are continuing to increase. But still, here the present condition is that transactions conducted on a scale impenetrable to the human gaze and manageable only through highly sophisticated automation. And the scale accounts for a significant percentage of overall global gdp in terms of notional value. It is a fact that movements occur in the single-digit microseconds and capital is accrued proportional to sytem and transport latency. The level of automation is rudimentary at this stage; it is problematic that from a computational perspective, machines don't quite have the neural complexity to rationalize around all deviations and hence their adaptability is limited. But I know neural-networking research is becoming apart of this field for advanced QR [you can see job positings requesting this skill specifically]. But isn't this expected? Couldn't we all see this coming? The continual derivitization of value to now where it is a function of precision timekeeping - the event becomes zero-point, completely disappearing? My view is that it will continue, and I'm surprised that we don't as of yet off-world, satellite-based dark venues. I do see the financial world as a second-tier, breakway civilization. And what about real-time-bidding advertising networks? A deeper extrapolation of value not relegate to the act of seeing / gaze, but rather the potentialization of the gaze? And how will the machines leverage that space? But his could be the 'ghettoization' of finance - a reversal effect of something taken to an ultimate extreme - whereas it's balkanization becomes abstracted to it's own extinction allowing for a new and perhaps more slow lane approach to resource allocation. Interesting subjects to discuss indeed. /chadscoville /www.riftrouter.cx -Original Message- From: Armin Medosch [mailto:ar...@easynet.co.uk] Sent: Monday, September 30, 2013 09:07 AM To: 'a moderated mailing list for net criticism' Subject: Re: nettime The secret financial market only robots can see ... # distributed via nettime: no commercial use without permission # nettime is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: http://mx.kein.org/mailman/listinfo/nettime-l # archive: http://www.nettime.org contact: nett...@kein.org
Re: nettime The secret financial market only robots can see
Hi Armin-- On Sep 30, 2013, at 9:07 AM, Armin Medosch ar...@easynet.co.uk wrote: 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. Right, I wouldn't call this algorithmic trading at all. This is general risk management: How exposed am I to interest-rate movements, shifts in volatility, big drops in a particular industry or the market as a whole? etc. There are standard measures for these things, usually called the Greeks: delta, gamma, vega, rho. The trading involved here can be minimal, depending on how often the desk wants to rebalance their portfolio to neutralize these risks. That could be once or a day or once an hour. But the main work and intelligence here is in the systems that compute these risk measures, and the people who decide what measures are meaningful to them. The trading doesn't have to be anything fancy. No algorithms needed, usually. 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. In my experience, the talk about open source in finance is exaggerated. All these systems run on Linux boxes, but that's pretty much where it ends. The algorithmic stuff tends to be proprietary, whether it's any good or not, and written in C++ or Java. There's no end of articles about how Wall St. has gone open-source, and I don't get it. They might use the gnu C++ compiler, or use cvs for source-control, but that's been going on forever. I don't think I've ever worked on a trading or risk-management system that wasn't proprietary. In fact I know someone who knows someone who used to work with a certain Russian programmer who was arrested and had his life more or less ruined because he was suspected of stealing the secret algorithmic code from the firm he was leaving in order to bring it to the hedge fund he was going to. Or so I've heard. While quants aren't needed to write the trading algorithms, they definitely write a lot of the code that gets baked into these systems--for figuring out what the fair price of some esoteric derivative is, for computing the desk's risk (see above), etc. There's a pretty clear separation of responsibility between the programmers and the quants, though the former know a hell of a lot about the market and the latter know a lot about software. Whatever else you can say about them, most of these quants, at least at the top firms, seriously know their mathematical shit. Many, but not all, of the programmers are equally on top of the technology. This is pretty specialized knowledge, which is why good Wall St. techies are paid as finance people rather than as programmers. Historically, no programmer in any other industry could make anything like what Wall St. tech people made, though I've heard that's changing with some people at Google etc. At the same time, Wall St. firms are getting stingi er. (Yeah, things are bad all over.) 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. See above. Certainly almost no Wall St. programmer's salary can touch a trader's salary, but they're still far above what other tech people make. It's
