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
Re: nettime The secret financial market only robots can see
On 09/27/2013 12:21 AM, Brian Holmes wrote: Finally, I do think that the claim to manage risk through hedging strategies tends to deny collective responsibility for risks that, nonetheless, are run by everyone and whose effective consequences are typically paid for by large numbers of people, whether through losses of vital assets like houses, or by taxpayers in the form of government intervention (whether it's in the economic, social or ecological realm). This is, precisely, the point. What has happened through financialization is not the rise of machines, or some creation of intelligent forms of agency beyond human comprehension. Such arguments are simply part of the narrative that underpins the creation of a social/economic system that centralizes rewards and decentralizes risk. But other than what has been promised by the hedging wizards, decentralized risk means simply that the risk is carried by everyone, rather than those who create and profit from it. For society, this is an incredibly destructive situation, since incentives the few to generate more risk, while the rest experience lives that are diminished and increasingly chaotic, since there is no telling who gets hit when the risk materialize. Perhaps, this is just the decline of the West, but it seems at last as much a reoganisation within it, that cannot be reduced to changes in the world economy. I'm currently in Athens, which is, in Europe, at the forefront of this experience. It's not pretty. The rise of ultraviolent fascists (with money from oligarchs, apparently) is terrifying everyone here. Whether yesterday's crackdown made any difference remains to be seen. The systemic forces, however, one which they rose in the first place, remain unchanged. Felix -- -|- http://felix.openflows.com books out now: | *|Cultures Ethics of Sharing/Kulturen Ethiken des Teilens UIP 2012 *|Vergessene Zukunft. Radikale Netzkulturen in Europa. transcript 2012 *|Deep Search. The Politics of Searching Beyond Google. Studienv. 2009 *|Mediale Kunst/Media Arts Zurich.13 Positions. ScheideggerSpiess2008 *|Manuel Castells and the Theory of the Network Society.Polity P. 2006 *|Open Cultures and the Nature of Networks. Ed Futura / Revolver, 2005 | |OPEN PGP: 056C E7D3 9B25 CAE1 336D 6D2F 0BBB 5B95 0C9F F2AC signature.asc Description: OpenPGP digital signature # 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
To restate what Brian wrote, in five times as many words: I think it's easy (and *usually* reasonable) to say, This thing that's happening now, and the backlash against it, is just like such-and-such a thing that happened 100 years ago, and all that fuss turned out to be very silly. So, whenever someone says, Everything used to be so wonderful (especially when I was young). The whole world's going down the toilet now! it's a good idea to point out that people in Chaucer's and Plautus's times were saying the exact same thing. People in the Old Testament got all teary-eyed for the good old days. One contemporary example is the ever-popular buggy-whip manufacturer, an analogy loved by Libertarian types. Science matches on! There will always be people clinging to a useless, outdated past. We've seen this again and again. Deal with it--and learn HTML5. Another is GMOs, where some people make the argument that, when you get right down to it, inserting pig genes into a tomato is really not all that different from transplanting a bean plant with a pair of household scissors. (This is a deliberately extreme example. No need to point that out.) Another might be the sexualization of children. If I note that explicit videos, sexting, and all the rest are bad for kids you could make the argument that this is no different from the fuss about Elvis or women wearing dresses above the knee, and we all know how ridiculous those controversies turned out to be. But is it possible that the thing happening now might really be qualitatively different from the identical thing that happened 100 years ago? I think it's important to leave that possibility open, though we know that being objective about the world we're immersed in is basically impossible. Maybe 999,999 times out of a million you're just being old and crabby. But there can be that one time where things really did take a permanent turn for the worse, and being able to spot that, or at least try to, is crucial. Did all the supposed horrors of Reaganism turn out to be a big nothing in light of Bushism? (Reagan would be considered a liberal Democrat today!) Is what's happening now with financial markets, income inequality, and the rest of it the same old thing we saw in the late 19th century and the 1920s--both of which we recovered from? I'd at least entertain the possibility that what's going on with financial markets now is qualitatively different and in some ways irreversible *given the corporate and government structures in place today*. And btw, I also think sexualization of kids in the early 21st c. is a very real and frightening problem (and I'm allegedly a Reichian). So getting back to the subject at hand, I think algorithmic trading was destined to fail in the long term, the same way interest-rate arbitrage and early program-trading in the '80s eventually failed. By definition, the way these things work is: (1) I come up with a formula that takes advantage of some inefficiency in the financial markets; (2) I and a few other early adopters print money for a few years trading on that; (3) everyone else catches on, and an arms race begins; (4) that inefficiency disappears because everyone's doing the same thing; (5) a bunch of people take a bath--perhaps taking the economy down with them, but that's another story; and (6) we dump this losers' strategy, go back to (1), and start again. I think a lot of what's happened in the markets recently really is qualitatively different, and algorithmic trading is an example of that. Super-complex derivative products are another. Whether traders eventually abandon those things and move on doesn't matter much, IMO. The way markets work now is rigged in various extreme ways, such that only a small group of people with very esoteric technology or human capital can make money at all, and most other people will get shafted as never before. I'm not talking about a Golden Age of capitalism--I'm saying any microscopic cracks or safe havens that might have existed before are now gone. Think of the way that so many workers in the US have had unions, welfare, etc. to at least protect them from starving. Those things will be gone soon if a certain of group of people has its way. And no, I'm definitely not saying things are hopeless, just hopeless under the system we have now, whatever you want to call it. BTW, I've worked with complex derivatives and high-speed trading systems. The people behind them would say (publicly) that they're simply providing liquidity to the market. They think what they're doing is essentially the same as what happened under the Buttonwood Tree in the late 18th century: http://www.loc.gov/rr/business/hottopic/stock_market.html ...which, of course, is bullshit. Cheers, --Dave. On Sep 26, 2013, at 6:21 PM, Brian Holmes bhcontinentaldr...@gmail.com wrote: Hi Chad - First off, not to worry, I recall good interactions with you and I respect
Re: nettime The secret financial market only robots can see
Dave, I am with you and Brian on this one, so I hope this doesn't come across as merely scholastic. It is not about same vs different, but about difference-in-sameness or the other way round. There was a rather sterile episode in economic anthropology along these lines known as the formalist-substantivist debate. But it's ancestor was the Methodenstreit (battle over methods) in late the 19th century German-speaking world. The issue was whether the ancient Greek economy was the same as or different from contemporary German capitalism (Schmoller in Berlin vs Menger in Vienna). Max Weber entered the fray saying We wouldn't be interested in the Greeks unless they were different and we couldn't understand them unless they were in some sense the same. I share your irritation with the same-old people, but we have to place our times in history and that means dialectic. Keith On Saturday, 28 September 2013, David Mandl wrote: To restate what Brian wrote, in five times as many words: I think it's easy (and *usually* reasonable) to say, This thing that's happening now, and the backlash against it, is just like such-and-such a thing that happened 100 years ago, and all that fuss turned out to be very silly. -- Prof. Keith Hart www.thememorybank.co.uk 135 rue du Faubourg Poissonniere 75009 Paris, France Cell: +33684797365 # 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
As someone intimately involved in this area for some time, and also privy enough to the dialogue in the academic non-practitioner space, in addition to the professional space, I am always amused to the extent with which electronic/hft/algo trading is misinterpreted and in many instances blatantly misunderstood. I know for many participants in this list, this subject is very controversial and hits very close to home - hence out of respect for a civilized discouse on the subject, I think generally before someone quotes 'NANEX' again, we would all do well to remember that overall having a debate about the ethics surrounding degrees of speculation in markets is highy ludic. The same technical parallax we use to communicate via nettime is also the mechanism utilized for deployment of sophistcated trading models. Machines being leveraged to generate resources is a legacy of our civilization - and arguing about the ethics of this specific incarnation of capital is reactionary and we need to do better. The conversation should be less emotional about the implications of this systemically, and instead how much novelty gets generated in culture as a afterimage of electonic market making. Robots trading was a forgone conclusion when NYSE SuperDOT came on the scene. Earlier, Reuter revolutions infomation arbitrage with the uilization of passerger pigeons to exploit data leakage between markets. I'm pleased to see that Brian Holmes stepped in to comment, as I respect his views on things nettime. However, I think we need to sharper with our critical analysis of this aesthetic and not dismiss this simply because the old media latches onto it as a point of controversy. /chadscoville /www.riftrouter.cx -Original Message- From: Brian Holmes [mailto:bhcontinentaldr...@gmail.com] Sent: Monday, September 23, 2013 12:20 PM To: nettim...@kein.org 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
On 09/23/2013 01:46 AM, nettime's avid reader wrote: The researchers say there’s much more to learn, especially at the border where human traders and robotic ones interact. One question is whether moving at computer speeds is inefficient because there’s less information available at that time scale—data just can’t move that fast, even electronically. Laboratory experiments suggest computers are more efficient on a human time-scale than a sub-second one. And if sub-second trading does continue, do market participants need to come up with sub-second hedges and derivatives to protect from this kind volatility? The question is poorly framed because the authors don't ask: Efficient for what? Or even better: What kind of society do we get when profit is produced - and economic activity is governed - by agents operating outside the perceptual and intellectual grasp of well over 99% of the people? Robomarkets then become an advanced case of what has been happening since the mathematization and computerization of finance began in the 1980s. I read the scientific text to which the journalistic article refers. It's a confirmation of what's already known. The principle of automated trading strategies is to provoke microvolatilities and cash in on them. Yet those strategies only work well when the markets are already volatile, as they were from 2007 onward. Since 2011 (which is outside the timeframe of the article), volatility has gone down while competition between the high-speed algo-traders has gone up. And now the regulators are moving in: http://tinyurl.com/how-the-robots-lost In my view, high-speed trading is not the invisible harbinger of a future apocalypse. It's just one more symptom of the actual apocalypse. best, Brian # 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
