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Trading Strategies >> General Discussions About Strategies >> algo trading is to blame for volatility
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Message started by Yury R on 12/06/08 at 11:53:24

Title: algo trading is to blame for volatility
Post by Yury R on 12/06/08 at 11:53:24

http://www.ft.com/cms/s/0/3f57311e-c246-11dd-a350-000077b07658.html?nclick_check=1

Title: Re: algo trading is to blame for volatility
Post by Co0olCat on 12/19/08 at 00:41:20

Why I am not surprised... It looks like 1987 again. Time-machine works!!!

Title: Re: algo trading is to blame for volatility
Post by Algo Designer on 12/22/08 at 00:10:15

Not unexpected. This is yet another avenue for highly adaptive trading models that take advantage of the volatility spikes caused by algorithms with short-term memory and/or optimised for the most recent data.

Title: Re: algo trading is to blame for volatility
Post by statstrader on 01/23/09 at 01:04:17

I would be curious to read a study on how volatility changed with respect to the simultaneous removal of short term uptick rule and trading collar 80a. Is it just a coincidence that a 1987 style 10+sigma event occurred just after the change?
Interesting how their "studies" showed absolutely no possible volatility impact would result from changes in the rules.

Don't want to become a board cynic here, but certainly that was some coincidence. Although, admittedly there were signs of increased volatility even before that; it's just as if the rules were changed to exasperate the break in volatility bands right before they approached the cliff's edge.
Kind of like throwing grease on a fire right as it begins to lose control.

Title: Re: algo trading is to blame for volatility
Post by willc on 02/14/10 at 02:45:53

In my perspective, volatility could be a good thing or a bad thing. It also drives the markets for many people who are attempting to invest and make a profit. It also allows many companies that are available for investing to be more competitive and try to drive their stock prices up.

If the market was always stable, I think there would be more of an issue. Volatility basically allows people who are trading the markets to enter and exit with little limitation.