DIGITAL AMERICA

Stock Market

// Posted by on 06/04/2015 (11:02 AM)

I recently got involved with stocks and bonds so this week’s reading was interesting to me. I always envisioned people standing around frantically waiting for the prices of stock to change so they could buy or sell accordingly. I suppose I got this vision from watching movies about the stock exchange floors on Wall Street. It never occurred to me that with advancements in technology that this could be done on a computer.

According to the article “Raging Bulls” leading up to 1970 stock exchange was done by telegraphic stock tickers and telephone calls. The article “High Frequency Trading” states that investors had to call brokerage firms in order to make trades and the firms would then have to call to the stock exchange floor to actually make the trade happen. This was a very time consuming task. With the advancements in technology this has now changed to being done on the computer by algorithms. The article “Raging Bulls” states that this is a good thing because “computers never get bored so they will haggle more than the person would.”

The articles seemed to try to persuade me the stock market going digital was a good thing. One example from “Raging Bulls” is that this was a good thing because computers can make the trades happen a lot faster than humans could. Another example from “High Frequency Trading” was that computers are more reliable than people. Another example that I have found in my dealings with the stock market is now that they are on the computer I can find out the price of stock much faster. Some people still go to the newspaper to look at prices but it is a lot easier for me to just do a quick Internet search.

Although those example seem to be positive I still worry about hackers. If hackers can hack into our computers and steal information then couldn’t they mess with the stock market? I found my answer in this week’s reading of “Raging Bulls.” I read that hackers can get into the stock exchange and input algorithms that could mess up the whole stock market. This seems to make me wonder if going digital was worth it?


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Comments:


Rosatelli said...

Hi Kaitlyn,

Congrats on getting some stocks and bonds! I encourage you to read the Golumbia article again, he is definitely not arguing that the HFT is a good thing. See if you can identify his argument in the first two pages and think about the evidence that he uses throughout the article to make his point. He is using HFT as an example to discuss the implications of increasing digitization and how the average person fits into these transformations.
Thinking about hackers and the stock market is always a concern, although much of the market functions on intranets, which are much more difficult to access. Intranets, of course, are private, therefore you have to pay for access to them. The market is becoming more and more insulated, and, according to some arguments you read last night, more volatile because of it.

// 06/04/2015 at 7:27 pm

Kindall said...

Kaitlyn: I like that you pointed out the damage hackers could do to the market. If we can pull off something like Stuxnet, I am sure hackers could shut down the market for a few hours.

I wonder if you’re right; is going digital worth that risk? Good point!

// 06/05/2015 at 2:25 pm

BonnieG said...

Good move Kaitlyn with investing in the market. Because of computer trading there are no brokers on the trading floor at the NYSE. Those days are long gone. In addition, anyone with a computer can trade with the exchanges without a broker. Yes, I also agree that high frequency trading is good for the investment industry. It cuts down on trading errors, and is more efficient. However as I described in my blog, with HFT those with bigger servers are the first in and first out; when stocks are bought and sold on the exchange.
In regard to hackers, should we consider the big corporations as hackers because they know the ins and outs of HTC and other trading tactics; in which allows them the capability of receiving the best prices on the exchange.

// 06/06/2015 at 10:43 am

Caitlin said...

Kaitlyn,

That’s pretty cool that you’ve just begun an adventure with stocks and trades. I am not into it and don’t think I ever will be. I find it fascinating but that’s about it.

I was also concerned about hackers for the exact same reasons. They easily can hack our wifi, our bank accounts, emails, etc., so I wonder too what keeps them from hacking the stock market as well.

// 06/06/2015 at 1:50 pm