<p>I am just going to play the odds.</p>
<p>How many times does the market drop 50 percent in 8 months?</p>
<p>3 times in 100 years?</p>
<p>I put the dividend date info of the stocks that I hold in Google Calendar. Almost everything I own pays a decent dividend so it is relevant information. And it’s nice to see the cash come in on the payment date.</p>
<p>That’s smart.</p>
<p>The vix is down today - what is that telling you folks.</p>
<p>Tells me people bought ahead of the ECB announcement and that includes option premium.</p>
<p>Now they are liquidating those bets.</p>
<p>Where’s that graph you posted, Dstark, that was so clear (in hind sight) on the market being overpriced in 2008? What does it look like now? I’d search thru this thread to find that thing if I had the patience…then to find it updated for today? Perhaps you oh wise one will have the link…</p>
<p>To put it another way, what does that advisor who thinks the market is gonna crash again know? What is he basing his advice on? I recall in 2007/8 there was lots of buzz about a crash but I never saw that particular graph. What is Suzie whatshername saying? She went on Oprah last time and warned that a crash was nigh.</p>
<p>I reposted what you asked for days ago.</p>
<p>Please don’t tell me you pay a seconds worth of thought into ANYTHING Suze Orman has to say…She is without question the worst commentator i have ever seen</p>
<p>Why Phillyfed? You don’t like her advising people not to buy variable annuities and whole life insurance policies?</p>
<p>There are so many firms not doing business with Knight right now…</p>
<p>1.89 stock price.</p>
<p>These guys wouldn’t buy us out.</p>
<p>I want to thank them for not being interested. :)</p>
<p>Ok…Looks like Knight asked for orders to be rerouted. That might be better than if firms just fled.</p>
<p>I wonder what exactly was Knight Capital’s software problem. I wonder if Knight Capital outsourced their software system and something got lost in translation? </p>
<p>For a simple example, hypothetical company ABC.
Current market px = $5.10
BidPX = $4.90, $4.20, $4.25
AskPx = $5.20, $5.15</p>
<p>Program switched the bid and ask because whoever coded it misunderstood what a bid is and what an ask is. Hence:
Buy ABC @highest AskPx
Then 30 seconds later sell ABC @lowest BidPx.
And do this stupid loop until eof business day or a HALT button is pressed. </p>
<p>I really dont understand how a new program code is put into production, goes live without going through a rigorous test phase simulating real-time data and values. </p>
<p>Unless, the real intent is that the retail traders are the lab rats.</p>
<p>I also really want to know exactly what happened and why, not simply “software error” or “glitch” or computer problem or some other obfuscating meaningless euphemistic platitude. I want to know what stupid thing was done and the idiot that did it, which is NOT a computer. We all know computers only do what they are told to do. </p>
<p>And the other thing that really tics me off about these things is they go back and cancel trades!!! So a liquidity provider (not to be confused with a job creator) puts in an honest to goodness bid below the market, and they see their bid surprisingly gets hit, 3 minutes later they sell their position out at a great profit only to find out later the buy side of the trade is cancelled, leaving them with an involuntary short position. All this does is punish liquidity providers and makes it more likely that next time the wild swings from a fiasco like this will be wilder. /rantoff… phew!</p>
<p>TJX was up 2.6% today.</p>
<p>If we get a bad employment number tomorrow, it may break out.</p>
<p>NJres, I don’t like the cancelling of trades either for the reasons you mentioned.</p>
<p>Supposedly, there is a time limit when trades can be cancelled. And if trades occur outside a certain percentage move they can be cancelled. 30 percent?</p>
<p>The guy who sat next to me typed in a bid of $43 instead of $34. And he asked me to
come over and look at his market because it didn’t look right to him. And I was … Busy, and I said, come on, it is not that difficult to enter orders. </p>
<p>And so the guy hit enter on the keyboard.
Uhhhhhhhh…
We lost 185,000 in 2 seconds or so before the computer shut off.</p>
<p>Luckily, the boss is a good friend of mine, because I should have checked that market. The guy sitting next to me was packing up, and ready to leave. Permanently.</p>
<p>It was preopening and the exchanges busted those trades. And the exchanges said, “they
aren’t going to bust Trades like that again. So don’t do this again.”</p>
<p>Now we have so many so called sanity checks so this stuff doesn’t happen.</p>
<p>New software…you never know. You do a lot of testing before you actually trade, but humans make errors. These big errors are very rare. Very rare.</p>
<p>krlilies, is your whole post hypothetical?
I guess a programmer could program a trade to buy offers and sell bids indiscriminately, but is that really what happened?</p>
<p>[This</a> Is What Happens When An HFT Algo Goes Totally Berserk And Serves Knight Capital With The Bill | ZeroHedge](<a href=“404 | ZeroHedge”>Zerohedge)</p>
<p>I know a lot pf people are freaking out, but Nite lost hundreds of millions and may have destroyed the firm.</p>
<p><a href=“Don’t Blame Technology for Knight Capital’s Blunder: Pro”>Don’t Blame Technology for Knight Capital’s Blunder: Pro;
<p>Good luck tomorrow, BCEagle 91.</p>
<p>I think that program trading is nuts. My brokers (most of them) offer that to me. As a software engineer - I wouldn’t touch that sort of thing. You could lose a ton on just commissions alone in a short period of time.</p>
<p>Computers can make big mistakes faster than anything else.</p>
<p>This mistake is rare. It went on for 45 minutes. That’s crazy. The trades were not monitored properly. I guess that is stating the obvious.</p>
<p>Computerized trading makes a ton of money; although, this loss is off the charts.
Computerized trading is putting other traders out of business.</p>
<p>When you trade stocks and options, who do you think you are trading with? Your brokerage firms sell your orders to firms that use computers, maybe even Knight.</p>
<br>
<br>
<p>How do you know that?</p>
<p>The Therac-25 is a standard case-study for those in CS programs. I used to work in a Customer Services Engineering Group and our job was diagnose high-priority bugs, among other things. Our manager’s manager brought us into a conference room for a meeting and showed us the 60-Minutes video on the Therac case where several people died from software errors. One of the guys on our team at the time worked for the company that made the machine.</p>
<p>[Therac-25</a> - Wikipedia, the free encyclopedia](<a href=“http://en.wikipedia.org/wiki/Therac-25]Therac-25”>Therac-25 - Wikipedia)</p>
<p>People make mistakes. You can put processes and procedures into place that decrease the likelihood of mistakes but there will still be mistakes that get through the cracks. Now most of these mistakes will probably never be seen in most environments but they will still be there. The cost to write 100% provably correct code that is non-trivial is typically high.</p>
<p>Even rocket scientists make errors.</p>
<p>[Metric</a> mishap caused loss of NASA orbiter - CNN](<a href=“http://articles.cnn.com/1999-09-30/tech/9909_30_mars.metric.02_1_climate-orbiter-spacecraft-team-metric-system?_s=PM:TECH]Metric”>http://articles.cnn.com/1999-09-30/tech/9909_30_mars.metric.02_1_climate-orbiter-spacecraft-team-metric-system?_s=PM:TECH)</p>
<p>Why do you think that Microsoft had to spend a decade fixing security bugs in Windows XP? Were they bad engineers? Did they not have enough process to ensure quality? Was their beta testing inadequate? Did they not use peer review?</p>
<p>I don’t really know how sausage is made and I really don’t care to know. I imagine that most people don’t know how software is made.</p>
<p>Well…</p>
<p>I do work for a HFT firm.</p>
<p>How often do we read about technical problems in HFT firms caused by software glitches that cause major disruptions in the markets.</p>
<p>There are millions of trades a day.</p>