Computers trading to "save" the markets

Supercomputer 'Edison' Will Perform 2 Quadrillion Operations a Second!

High-speed trading now dominates U.S. stock markets, buying and selling in a fraction of the time that it takes to blink. Computers detecting rapid swings in prices and instantly reacting builds volatility and more trades, generating a sea of chaotic data and a vicious feedback loop that can lead to nightmares far worse than May 2010's infamous "flash crash."

Faster still is "Edison," a supercomputer tended by Lawrence Berkeley Laboratory scientists in a former Wells Fargo Bank building in downtown Oakland, Calif. Edison-like computers could track ultrafast trading across the nation's many markets, detecting precursors to a crash — and sounding early warnings for regulators seeking to avert a gruesome economic wreck.

It would be like a NASCAR race yellow flag warning drivers to slow down, scientists say.

"If improved monitoring and regulation can build some greater trust in the market, everyone benefits," said David H. Bailey, director of the lab's new Center for Innovative Financial Technology, which is building a bridge that links computational science and financial market communities.

Edited by Rogerdodger, 22 April 2013 - 08:55 PM.

why would you want to prevent a market crash ? whatever actions are taken to avert downside, would also end up limiting upside. if the only thing you are there to make money (exploit) on is the volatility, then you have zero skin in the game, and are a parasite on the face of humanity. if you are willing to take true position, and have skin in the game, then you deserve the payout, and with that comes the risk. i see absolutely nothing good coming from a supercomputer doing what you prescribe, and their nascar yellow flag analogy is just plain stupid. what they need to do is make the hft's play by the rules, and have to put up full capital, on every trade, with no betting on margin allowed. if they do that, then you won't need that supercomputer function. this is no different, than the fed completely backstopping the so called too big too fail banks, using taxpayer money, and then also now gaining lawful rights to confiscate (steal) depositor money for bail ins. if the banks want to pay depositors 30% interest rates, or be held accountable to the same usury charges, they place on credit card holders, then fine, go ahead and take some risks. but they need to pay out the ying yang. banks get to use massive leverage, opm, and if they mess up big time, they only wipe out taxpayers or depositors, and skim off all the upside. Wow ! why not give every trader on the planet, that same benefit ?????? all reward, zero risk. ps. this gets back to all the market distortions caused in most part by the fed. assessing risk is a joke. banks (TBTF) need no risk assessment ability at all. they can take 100000000 to 1 leveraged bets, and if they go wrong, the banks essentially absorb no losses. in fact, the ceo bonuses just get bigger, and are rewarded for taking this no "risk", and are rewarded even if a trade goes bad and loses gobs of money, since its OPM. shareholders love it, because their stock just keeps going up. anyone who'd be stupid enough to put their money in a bank with near zero interest, deserves to lose every dime of it, if its for anything more than day to day transactions, especially if they actually buy into the charade called FDIC deposit insurance. banks arent even good clearing houses for deposits, or credit cards. the larger they are, the worse. and essentially most are completely out of the lending business. they are in the re-packaging, and superficial fee skimming business. the more fees they can come up with, the merrier for them, the worse for the idiot who banks with them.

They already publish NYSE imbalances during the day.