Author: Graham Laight
Date: 02:30:27 06/07/01
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On June 07, 2001 at 04:38:40, David Blackman wrote: >On June 06, 2001 at 13:01:56, Graham Laight wrote: > >>Right now, if you want to buy the stock selection program "Tradingsolutions", it >>will cost you $1,000. Presumably, it will allow you to select stocks and time >>your purchases to improve your chances of making money. > >Ok. So every small stock trader in the world buys this and runs it on their >internet connected ms-windows-98 box without a firewall, and probably with file >sharing turned on for anyone who can connect, and probably they click on dubious >attachments that arrive in email as well. > >Then all we need is a big stock trader who is slightly more dishonest than most. >He hires a script-kiddie to break into all the small stock trader's computers >and hack the program so it says "Sell XYZ". Then when XYZ drops to about 1/4 of >it's current price and is just short of being de-listed, our big stock trader >buys lots of XYZ stock really cheap. Then he hires the script-kiddie again to >hack the program so it says "Buy XYZ". Then he waits for the price to reach >about 4 times it's current price and sells. > >This is just one example of many ways computerised trading can make the market >MORE volatile than it is now. I agree wholeheartedly in the shorter term. Increased reliance on computer selection may partly explain the high volatility of the DJIA right now. But I maintain that in the longer term, when bugs like the one described above by David have been ironed out, we'll have much smoother stock graphs. -g
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