i must (somewhat) sheepishly admit, that i don't see that much
difference between yesterday's human-driven liquidity providers (floor
traders) and the machine-driven liquidity providers of today (hfts). the
only difference is that as a local in the pit, we often possessed
exogenous information, that was yet to be incorporated in the market.
predatory algorithms must rely on their endogenous actions to trigger
the desired outcome. of course, in my own version of strategic
sequential trading, i would often hit bids and lift offers in search of
stops, just not as efficiently and unemotionally as hfts. of course,
our rather dubious actions were as summarily and similarly rationalized
back then as they are today; as our privilège intitulé and due
compensation for the risk we incurred for providing liquidity. after
all-was-said-and-done however, we did it for the same reason that a dog
licks his balls... because we could. perhaps, if goldman wasn't obama's
largest campaign contributor, sec employees didn't have quid pro quo
agreements with private sector bd's and wall st. law firms (for post
govt.-service employment) and the exchanges hadn't gone for-profit, mr.
lewis would have had to write a book on a different topic.
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