Comment by clickety_clack
8 hours ago
24/7 trading sounds like a nightmare. “Your retirement savings crashed 30% because there wasn’t enough liquidity to cover a 3am panic over non-news”.
8 hours ago
24/7 trading sounds like a nightmare. “Your retirement savings crashed 30% because there wasn’t enough liquidity to cover a 3am panic over non-news”.
The beauty of it, though, is that it would recover almost immediately as systems arbitrage an obviously stupid situation.
But on what time scale? Before a few connected entities make a profit or after?
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'.
Makes no difference unless you are a daytrader
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.
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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.
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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.
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%.
>while you closed out your “safe” retirement positions at -15%
User error
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.
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.
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> 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.
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.
Of course they have... There have been multiple 'flash crashes' which corrected in seconds.
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We already have 23/6 trading with index futures. The S&P500 (ES), NASDAQ 100 (NQ), DOW (YM) will sometimes gap up or down on open just to match overnight trading.
Honestly, stocks should trade for three hours a day. 24/7 trading sounds like a win for exchange operators and a loss for anyone else.
And even that seems kind of generous to me. I see absolutely zero value in stock trading continuously for any length of time. Businesses don't make purchasing or investment decisions in that time span, nothing of significant value can even be created or sold or shipped in those time spans.
Maybe even just a single auction in the afternoon.
I saw this as a serious proposal somewhere but I can't remember where.
There are exchanges out there that run continuously but with delayed information feeds.
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one per week should do it.
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If that were true then nobody would show up to trade during the extended hours and therefore absolutely nothing will change.
but you just don't sell and wait until the liquidity comes in and prices return to normal at 9am, no?
Significantly large fluctuations, even if largely irrational themselves, can cause effects which have durable impacts on value.
Give an example don't leave us hanging. I'm really curious how you can find an example of a temporary market liquidity move turning somehow into a long term adverse event for a company. Never heard of it
There's already a huge futures market Liquidity will just migrate.