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September 26, 2015 | Algorithms trade with Algorithms to manipulate markets!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian:

We now have mostly an Algo driven trading market. All our ‘prices’ are within cyberspace and Algo Wealth is what traders desire. Since the human decision-making process is slow compared to a speed-of-light Algorithm, traders now desire this speed to execute their trades. Algo’s now trade with Algo’s (start to end) so as to maximize trading profits. Traders follow the ‘prices’ of prior trades to develop their strategies. The ‘tick chart’ is essential so as to follow prior cyber transactions. It’s all done within Cyberspace and virtual reality is now here for trading, investing, saving, money circulation, and money creation. Think about this new world of Cyberspace (using your inner ‘imagination’).

What is an Algorithm: An algorithm is a specific set of clearly defined instructions aimed to carry out a task or process. Algorithmic trading (automated trading, black-box trading, or simply algo-trading) is the process of using computers programmed to follow a defined set of instructions for placing a trade in order to generate profits at a speed and frequency that is impossible for a human trader. The defined sets of rules are based on timing, price, quantity or any mathematical model. Apart from profit opportunities for the trader, algo-trading makes markets more liquid and makes trading more systematic by ruling out emotional human impacts on trading activities.

Algo-trading provides the following benefits:

  1. Trades executed at the best possible prices
  2. Instant and accurate trade order placement (thereby high chances of execution at desired levels)
  3. Trades timed correctly and instantly, to avoid significant price changes
  4. Reduced transaction costs (see the implementation shortfall example below)
  5. Simultaneous automated checks on multiple market conditions
  6. Reduced risk of manual errors in placing the trades
  7. Backtest the algorithm, based on available historical and real-time data
  8. Reduced possibility of mistakes by human traders based on emotional and psychological factors

The greatest portion of present day algo-trading is high frequency trading (HFT), which attempts to capitalize on placing a large number of orders at very fast speeds across multiple markets and multiple decision parameters, based on pre-programmed instructions.

Evolution of Automated Trading

In the U.S. markets, the SEC authorized automated electronic exchanges in 1998. Roughly a year later, HFT began, with trade execution time then being a few seconds. By 2010, this had been reduced to milliseconds. The growth of computer speed and algorithm development has created seemingly limitless possibilities in trading. But AT and HFT are classic examples of rapid developments that, for years, outpaced regulatory regimes and allowed massive advantages to a relative handful of trading firms.

Conclusion: We live in a New World of finance where cyber currencies, stocks, bonds, and all kinds of derivatives are now traded within Cyberspace. This virtual environment allows traders to use imagination and logic strategies to manipulate all our markets. The biggest manipulators of our markets are our Central Bank trading desks (hidden behind closed doors) and without any market transparency. The imaginary nature of trading and price rigging allows select trading desks to rig entire markets (which then respond electronically to these trading desks and their computer strategies). Algorithms have changed our world of finance and the profession of economics. We now live mostly in CYBERSPACE! A crash of these imaginary markets  is near! When? Soon! Enjoy your imaginary profits for a few more days, weeks, or months. The END, however, is near! Logic will prevail! Enjoy for now! I am:

P.S. Which trading desks are manipulating (the spot prices) of our silver and gold markets? This has been my question for the past few years. Price suppression is obvious to me as I watch daily price slams via algorithmic trading strategies on my virtual price tick charts. My sense is that our higher-up policy makers have chosen to ‘suppress’ these precious metals so as to create a psychology of acceptance for their imaginary cyber currencies (especially the American cyber dollar). Suppression of cyber prices is now easy for trading desks which have ample cyber dollars in which to execute their strategies (price suppression)…electronically. Think on this issue to discern what is happening…via our corrupt Central Bank/Treasury policy makers!

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September 26th, 2015

Posted In: Kingdom Economics

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