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Excellent Book: Dark Pools: High-Speed Traders, A.I. Bandits (Scott Patterson)
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Excellent Book: Dark Pools: High-Speed Traders, A.I. Bandits (Scott Patterson)

  #1 (permalink)
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Excellent Book: Dark Pools: High-Speed Traders, A.I. Bandits (Scott Patterson)

I must say I really enjoyed this book. Very easy reading on how high frequency trading came about etc... Goes back into how electronic trading was created and took off. Anyone interested in learning about High Frequency topic this is a must. Fascinating how Island was run on a single Dell computer that then morphed into what is largely the market today.

"A news-breaking account of the global stock market's subterranean battles, Dark Pools portrays the rise of the "bots"- artificially intelligent systems that execute trades in milliseconds and use the cover of darkness to out-maneuver the humans who've created them.

In the beginning was Josh Levine, an idealistic programming genius who dreamed of wresting control of the market from the big exchanges that, again and again, gave the giant institutions an advantage over the little guy. Levine created a computerized trading hub named Island where small traders swapped stocks, and over time his invention morphed into a global electronic stock market that sent trillions in capital through a vast jungle of fiber-optic cables.

By then, the market that Levine had sought to fix had turned upside down, birthing secretive exchanges called dark pools and a new species of trading machines that could think, and that seemed, ominously, to be slipping the control of their human masters.

Dark Pools is the fascinating story of how global markets have been hijacked by trading robots--many so self-directed that humans can't predict what they'll do next."


Dark Pools: High-Speed Traders, A.I. Bandits, and the Threat to the Global Financial System

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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  #3 (permalink)
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I also really enjoyed the history of Datek into Ameritrade. Anyone who traded back then will find the history fascinating. It is a behind the scenes look down memory lane if you were an early online day trader. This book is really a sleeper and gave me the best understanding of HFT and the danger it poses to us all.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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This book and its author (Scott Patterson) were also mentioned multiple times by Eric from Nanex in the High Frequency Trading Webinar on futures.io (formerly BMT):

https://futures.io/traders-hideout/21081-webinar-telvent-dtn-nanex-high-frequency-trading-hft-high-frequency-trading.html

Mike

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@Big Mike some of the Nanex data is also mentioned in book. This book really surprised me. Just a great read. Would be an interesting guy to get into a webinar.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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Another thing I learned from reading this is the HFT systems are way more advanced than I realized. I think most average traders don't really understand what HFT really is. I know I had some misconceptions about it that this book cleared up. Once you understand it it will scare the (fill in the blank) out of you if it does not already. It has gotten so out of control even some of the early HFT builders are sounding alarm bells.

This quote from book blew my mind "There was even chatter about measuring trades in picoseconds-trillionths of a second (a picosecond is to one second as one second is to 31,700 years)"

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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This is a great book, laying out the history of electronic trading and HFT.

The thing that continues to bother me that I learned from reading this book is the "special" order types that are only available to a select few. This needs to be addressed. Limit orders that are hidden from the market and then permitted to jump to the front of the queue should be illegal.

Does anyone know if these "special" hidden orders are used in the futures market, particularly on CME products?

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rickey View Post
This is a great book, laying out the history of electronic trading and HFT.

The thing that continues to bother me that I learned from reading this book is the "special" order types that are only available to a select few. This needs to be addressed. Limit orders that are hidden from the market and then permitted to jump to the front of the queue should be illegal.

Does anyone know if these "special" hidden orders are used in the futures market, particularly on CME products?

You do realize that by law, the exchanges post certain orders a fraction of a second sooner to certain entities ahead of retail traders and it's all legal/up and up?

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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RM99 View Post
You do realize that by law, the exchanges post certain orders a fraction of a second sooner to certain entities ahead of retail traders and it's all legal/up and up?

I find it hard to believe, how is that legal ! They are putting the retail traders at a disadvantage legally.
How can they make such laws which are like day light robbery.

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The order types and what exchanges they are on were covered in the HFT webinar.

Also, remember who is writing the rules. Firms lobby Congress to get exactly what makes them the most money.

Sent from my DROID RAZR using Tapatalk 2

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
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4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

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