| ▲ | jandrewrogers 8 hours ago |
| The beauty of it, though, is that it would recover almost immediately as systems arbitrage an obviously stupid situation. |
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| ▲ | plussed_reader 8 hours ago | parent | next [-] |
| But on what time scale? Before a few connected entities make a profit or after? |
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| ▲ | Dylan16807 7 hours ago | parent | next [-] | | The time scale is at least a thousand times faster than necessary for your retirement savings to be safe. The problem of investment companies selling stupidly at 3am solves itself as they either learn or go bankrupt. And the counterparties making money off those dumb moves don't need to be 'connected'. | |
| ▲ | terminalshort 5 hours ago | parent | prev | next [-] | | Makes no difference unless you are a daytrader | |
| ▲ | pembrook 4 hours ago | parent | prev | next [-] | | Milliseconds? Any overnight mispricing is going to become an arbitrage opportunity for market makers, hedge funds, and HFT firms...whom will then compete with each other to mine that arbitrage opportunity until profits go to zero, solving the market inefficiency and mispricing problem over time (and by over time, I mean like probably the first few nights and then it stops being an issue forever). In other words, a liquidity-based mispricing that happens consistently every night is going to quickly stop being mispriced since its so predictable. | | |
| ▲ | mtsr 4 hours ago | parent [-] | | Extracting value from the market as they do it and leaving everyone operating at normal time/capital scales with less. Or isn’t that what you meant? | | |
| ▲ | pembrook 4 hours ago | parent [-] | | Yes, when you correct a mispricing in markets that is a valuable service and you tend to get paid in proportion to the mispricing you correct (this is why markets work so well, they provide dynamic incentives in a decentralized way). In case you aren't aware, a world outside the US exists on different time zones and also invests in US capital markets. Having 24/7 trading a massive value-add for the entire world who also invests in US companies, which benefits US companies tremendously given they will continue sucking up the world's capital. This is yet another reason why global companies will continue going public in US markets instead of their own. Meanwhile Europe will continue struggling to form a capital markets union over the next 50 years while they slowly translate legal documents back and forth to each other in 42 languages, growing the fine dining economy of Brussels more than their domestic economies. |
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| ▲ | colechristensen 7 hours ago | parent | prev [-] | | If you're not trading overnight and there's a flash crash that corrects itself overnight... it's the people who are trading overnight taking money from each other. | | |
| ▲ | gizajob 4 hours ago | parent | next [-] | | It’s easy to forget that “overnight” trading is the middle of someone’s day, somewhere. Generally Asia. | |
| ▲ | bastawhiz 6 hours ago | parent | prev [-] | | Most Americans who invest money don't trade at all. They pay some guy at a bank to do it, and the guy at the bank is exactly the kind of guy who is trading at 3am. | | |
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| ▲ | koliber 3 hours ago | parent | prev | next [-] |
| Most of the time things will work as they are supposed to and arbitrage will work as a damper. Every once in a while you'll get a self-reinforcing loop and then it will work as an a run-away amplifier. |
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| ▲ | svnt 6 hours ago | parent | prev | next [-] |
| No, they stop hunt their way to depressed prices where they then buy anticipating the recovery while you closed out your “safe” retirement positions at -15%. |
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| ▲ | thfuran 6 hours ago | parent [-] | | >while you closed out your “safe” retirement positions at -15% User error |
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| ▲ | dlenski 4 hours ago | parent | prev | next [-] |
| I'm extremely skeptical about this. 24/7 trading will definitely burn a lot of extra energy in datacenters, make some speculators a little richer, and make a LOT of retail investors nervous… But what actual real-world problem will it solve? I for one am skeptical that more liquidity is always good. I think that having achieved $0.01 spreads, we're well-past the point of diminishing returns with high-frequency trading. |
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| ▲ | elil17 4 hours ago | parent | next [-] | | Right? Why do we even need all-day trading? I have seen a once-daily auction proposed, which seems like a sensible approach to me. | | |
| ▲ | jedberg 3 hours ago | parent [-] | | That wouldn't be enough liquidity, and also wouldn't solve the problem if the auction happened at a specific time. Day traders would all put in their bid at the last possible moment. What solves the day trading problem is doing chunked actions at random small intervals (like between 2-7 seconds). Then you can't put your bid in at the last moment because you won't know when it is. So your best bet is to put in your bid when you've chosen a price, knowing that it will resolve within seven seconds or less. |
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| ▲ | pembrook 4 hours ago | parent | prev [-] | | > But what actual real-world problem will it solve? I know most Americans don't travel, but are you aware that timezones exist and there's an entire world outside the US that also invests in US companies? Why do you think global companies want to list in US capital markets instead of their own? Being the world's most desirable capital markets is a massive boon for the US economy and 24/7 trading will only accelerate this trend. |
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| ▲ | mmooss 7 hours ago | parent | prev [-] |
| In the past, stupid situations on Wall Street have not resolved that way; they've resulted in disasters that cause economic harm to many people in the country and the world. Though sometimes people on Wall Street do make money from those situations. |
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