High-frequency trading and the $440m mistake

Long, short, Bitcoin, forex - Plenty of alternate market disuccsion.
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L.o.S
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Those articles make for some interesting reading!

The practice of short selling.. it involves some mixture of borrowing selling and buying back but can anybody explain how this works? I'm assuming the equivalent process on BF is backing.

From studying my own reactions I feel two of things that drive the Betfair markets are fear and greed; prices are often chased far faster and further than I think they should naturally go, does this happen in the stock market too? So if you can master BF then you may be better placed to tackle the stock market/financials.
steven1976
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"The practice of short selling.. it involves some mixture of borrowing selling and buying back but can anybody explain how this works? I'm assuming the equivalent process on BF is backing."

If BF cared to do it themselves, it would mean borrowing nothing. Just basically flashing up a load of numbers until other money appears in the market and then go against it with bigger amounts. They wont always have it right and someone may keep gambling and they lose but this is the risk they take on. They look to either take it to a new position to sell it back to the panic buyer or by creating a fast sudden move, new people enter in the market behind them looking for a scalp on the way back out. Therefore, they could sell off to that scalper.

If it wasn't bf then it would require a minimum of 2 accounts linked to some nice software or spread sheet to do the same and always hedge the two or more accounts so that there was zero balance between against the linked accounts. It would also need a shed load of money! You are not going to get far trying to trick the trickers with a 500 quid bank.

As for taking it to the stock market, as them articles explain, the big boys are already doing all these tricks and more. so Im sure if the people that regulate the stock markets cant keep up with them then.....
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L.o.S
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steven1976 wrote:"The practice of short selling.. it involves some mixture of borrowing selling and buying back but can anybody explain how this works? I'm assuming the equivalent process on BF is backing."

If BF cared to do it themselves, it would mean borrowing nothing. Just basically flashing up a load of numbers until other money appears in the market and then go against it with bigger amounts. They wont always have it right and someone may keep gambling and they lose but this is the risk they take on. They look to either take it to a new position to sell it back to the panic buyer or by creating a fast sudden move, new people enter in the market behind them looking for a scalp on the way back out. Therefore, they could sell off to that scalper.

If it wasn't bf then it would require a minimum of 2 accounts linked to some nice software or spread sheet to do the same and always hedge the two or more accounts so that there was zero balance between against the linked accounts. It would also need a shed load of money! You are not going to get far trying to trick the trickers with a 500 quid bank.

As for taking it to the stock market, as them articles explain, the big boys are already doing all these tricks and more. so Im sure if the people that regulate the stock markets cant keep up with them then.....
I see, I got that explanation from a program called Million Dollar Traders, guess it's not entirely accurate. I meant in a more general sense, short selling makes money by prices going down, which we do on BF by backing.

I read somewhere that BF trade in the markets themselves, wonder how much truth there is to that. Maybe the mad bomber who has mysteriously disappeared was them experimenting!

Stock market seems so complicated. Granted I'm far from mastery on BF but at least conflicts on the other side of the world wont affect my trade on the favourite at Ascot.
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Euler
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A dark magic: The rise of the robot traders

http://www.bbc.co.uk/news/business-23095938
andyfuller
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Euler wrote:A dark magic: The rise of the robot traders

http://www.bbc.co.uk/news/business-23095938
Interesting listening - the best one I have heard to date on it. To give Redtra his due he spotted it first here:

viewtopic.php?f=2&t=8081

I personally don't feel to 'wound up' about it all. Like with the Betfair markets I see it as just part of the market and I am sure it creates opportunities as well as takes them away. Just part of the evolution of the market.

Has anyone read this book about it, if so any good?

The Speed Traders:

http://www.amazon.co.uk/gp/product/0071 ... ROKL5A1OLE
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Euler
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High frequency trader fined more than $3m by regulators

Financial regulators in the UK and US have fined a high frequency trader and his firm more than $3m (£1.95m) for manipulating commodities markets.

http://www.bbc.co.uk/news/business-23405925
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Euler
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New York seeks curbs on high-frequency trading

http://www.bbc.co.uk/news/business-26637465
LinusP
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PeterLe
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Liam
Thanks for posting; Ill have a read of that after the racing.
If you haven't read it already, Flashboys is a good read. Its certainly made me think more about how I interface with betfair
Regards
Peter
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Euler
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steven1976
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"Latency Arbitrage is an important concept when discussing High Frequency Trading, and refers to the fact that different people and firms receive market data at different times. These time differences, known as latencies, may be as small as a billionth of a nanosecond, but in the world of high speed trading, such differences can be crucial."

Source http://altanswer.com/video/latency-arbitrage/

In the world of BF, change billionth of a nanosecond to anywhere between 3-8 seconds for some of their inplay markets! :lol:
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Euler
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Some interesting data in the article underneath that: -

http://www.sec.gov/rules/concept/2010/34-61358.pdf
LinusP
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PeterLe wrote:Liam
Thanks for posting; Ill have a read of that after the racing.
If you haven't read it already, Flashboys is a good read. Its certainly made me think more about how I interface with betfair
Regards
Peter
I just finished it! Loved it, really interesting how similar it is to what happens across betfair and betdaq. I even created my own hft bot this morning that made 20p :D
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gutuami
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a kind of high frequency trading 200 years ago

https://www.youtube.com/watch?v=2tdiKTSdE9Y
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