The Importance of Understanding Your Shit: High Frequency Trading

“…every human being who knew how high-frequency traders made money was making too much money doing it to stop and explain what they were doing.”

“…the most sophisticated investors didn’t know what was going on in their own market.”

“So long as it served the narrow self-interests of everyone inside it, no one on the inside would ever seek to change it, no matter how corrupt or sinister it became — though even to use words like “corrupt” and “sinister” made serious people uncomfortable, so Katsuyama avoided them.”

The linked article is quite long, following an Asian-Canadian banker’s dive into the sewers of high frequency trading. There are many parallels with other areas of security, mostly along the lines of my old adage — “don’t trust anything you don’t understand.”

And, if something you don’t understand starts acting odd, maybe it’s time to poke under the hood… just be aware you may be horrified at the black crawling systems you find underneath!

http://www.nytimes.com/2014/04/06/magazine/flash-boys-michael-lewis.html?_r=1

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