[Beowulf] Pricing and Trading Networks: Down is Up, Left is Right

[Vincent Diepeveen]

On Feb 18, 2012, at 5:45 AM, Lux, Jim (337C) wrote:
>>
>> It has crossed my mind for just a second that if 1 government would
>> put 1 team together and fund it,
>> and have them produce a magnificent trading solution,
>> which for example plugs in flawless into the IBM websphere,
>> and have their own traders buy this, especially small ones with just
>> ties to their own nation, that in theory things still are total  
>> legal.
>
> There was a famous challenge about breaking DES, where it was done  
> with
> FPGAs.
> But why would a government fund such a thing (except perhaps as an
> economic weapon.. Humorous thoughts of died in the wool Marxists  
> cackling
> at the thought of destroying the capitalists with their own trading  
> tools,
> developed by a centrally planned "trading machine establishment #3".

In the first place government already indirectly runs so many  
companies (pays directly or indirectly the jobs
created there), a sick habit especially in Europe, that the plan i  
sketched there
would be peanuts to execute. they do have the people for it, they  
already pay the companies
to keep dudes busy and spoil years of their lives, which IMHO is a  
very evil thing;
basically anyone above IQ120 is gonna get hammered down by the  
government in a mercilious manner;
that means that vaste majority 95% or so, will shut up rest of his  
life, give 0 criticisms publicly anymore
and go the selfish way - whereas he or she otherwise would give that  
criticism, which is so crucial for
democracies to selfcorrect; so that really is a problem now for
democracies as a democracy cannot function if the clever get hammered  
down.

Fools take over then. Right now statistics here in Netherlands are  
that 90% of politicians are there just with intention of getting a job.

Very selfexplaining statistics.

Now on countries - most nations, and Germany and USA are no different  
there - work pretty mechanical in how they do business.
If they see an opportunit to make big cash for their country they  
will be tempted to do it.

Currently the huge changes of the past few years in financial  
industry, from an industry dominated by traders who had a financial
background, to the current NSA type struggle for speed, hardware and  
game tree search type manners of making money there;
in past what was very common was some guy X who owned a bunch of  
houses/buildings, who was trading. He talked to someone, CEO
of some company. The CEO said nothing useful, but our guy X concluded  
he blinked a lot and based upon that tried to sell his interest
in that company.

That game has changed. What has come back is that new datacenters  
will allow up to trading thousands of times per second in the same
instrument, say future Mellanox, which in long term we expect to go  
up. Yet we trade thousands of times per second in this same instrument.
So when it drops 1 cent, we sell a little again, the slower traders  
will then take another few milliseconds or so to have sold, it'll go  
down,
so we can really make a big profit based upon 1 expectation, just by  
trading nonstop.

This is actually what happens. This is not an 'example'. this  
behaviour is what happens at the exchanges. At most exchanges it's  
limited
right now to a 200 times per second in the same instrument, yet where  
the datacenters are having faster networks this 200 goes up already  
by a lot.

These are *measured* statistics; so hedgefunds making great profits  
past few years, they factual trade up to 200 times per second in the  
same instrument
during surges.

Sure rest of day nothing happens there - but each day there is of  
course at least 2 surges, sometimes 3 or more.



>>
>> How do you get the best software engineers then for your trading
>> application?
>
> By asking your other software developers?  As we used to call it in  
> the
> entertainment industry "Neportunity".
>>
>> And what would that 'other channel' be then?
> Personal contacts.
>

Wasn't the idea of building a resume that you could get hired based  
upon NOT having a friend somewhere?

>>
>> Vaste majority simply isn't doing this.
>
> Let's see.. Unemployment in the software industry is down around 3%  
> these
> days (viz 8-12% in general, and 20-25% in certain demographics and  
> areas).
>  They're finding jobs somehow.  10:1 or 50:1 resume to open  
> position isn't
> uncommon. Somehow they find the 1 in 50, and a fair number of  
> studies show
> that it's not done by some HR person carefully reviewing the 50  
> resumes to
> find the one shining diamond.

Not sure about the States, but in Europe the statistics here get  
manipulated bigtime of course.

A good example is that one day we had big unemployment, they moved  
then lots of folks from
unemployment statistic to disabled statistics. Then suddenly lots of  
folks got still the same amount
of money yet politicians cried victory that unemployment statistics  
went down.

Well this nation, The Netherlands, is a bad example, as out of the  
7.8 milion who are in workeable age,
5.5 million of them work at (semi-)government.

Not really following elections in the US, but seems Obama wants to  
adapt to that model as well? - let's take that off the mailing list  
though

>
>
>> No matter how genius you are, if all you do is write fortran, and
>> didn't study finance,
>> then you are not allowed to write a trading application, AS YOU WON'T
>> GET HIRED :)
>
> More an example that different industries hire for different skill  
> sets
> and backgrounds. You're right, I can't imagine FORTRAN being very  
> useful
> in trading. But hey, I don't write trading apps.. For all I know it's
> mostly matrix math and FORTRAN is pretty good for that.  Maybe they  
> want
> people who write FORTH or LISP or PROLOG.
>
> The point is, it's a very niche market, looking for a very niche
> programmer that is probably not remotely representative of software
> developers at large.
>

My point was that i would want to hire that genius guy. fortran or C,  
no big deal.
If he can write fortran he can write C, or will have enough skills to  
get down to the utmost details
speeding me up somewhere or fixing another problem, or finding  
another problem we have to avoid
that we didn't notice yet.

Financial industry is so spoiled as they pay such high salaries, that  
the best thing that describes it is 'the old schoolboys network'.
It's so lucrative to work there in higher positions, that everyone of  
course wants it.

I remember speaking to some very influential people past years and  
sometimes i always wondered how such mediocre guys or ladies
managed to get where they are.

But in the end i always concluded that some very mediocre guys  
sometimes have 1 big talent  which nearly 0 geniuses have - and  
that's getting hired.

>
>>
>>> I didn't get my job at JPL by submitting a resume, and I think
>>>
>>
>> When you got there, there was a circle at your resume around the word
>> 'NASA'
>
> Actually not.. I hadn't worked at JPL then. The circle was around
> "microscan compressive receiver", purely by chance.

Ah the truth is always painful isn't it?

Over here most managers aren't very impressed by their own H&R  
departments.
Most H&R departments over here get manned actually get 'girled' by  
22-30 year old. Usually ladies sometimes men,
with a simplistic college degree at most. Most actually are well  
informed yet questionable is whether they also are capable of
thinking at that level. Selection of resumes/CV's always happens in  
the same manner. In this nation a job that involves technology,
say making software for a network card, means they would require from  
you you get from a technical university. So normal universities,
say for example Utrecht (in top 50 of planet), where i studied - they  
throw such CV's away. Not a single look get taken.
It's just 'elimination time'.

I heard many reports of guys who were allowed to speak for a job  
based upon 1 company they worked at and nothing else ontheir CV.
One of them litterally reported that when he asked who had put that  
circle around that specific company he worked for, which for him was
a minor job, just like 1% of what he had achieved in life, the  
explanation from the manager was he got the CV like that from H&R and  
that they
had encircled that company for him - he didn't do it.

Usually these ladies and men at H&R here are paid a salary that's  
well below what the actual software engineers make here.

Entire IT average here over entire nation is around 52k euro a year.  
H&R is nearly half of that. H&R management is hardly over 40k euro a  
year.

I remember talking to some major Chinese factories, and after having  
a good look over there, i was a tad amazed by the differences in  
payment there.
Workers and software engineers really made little. Total peanuts.  
Also they worked 6 days a week and live on site in a small room, not  
seldom also shared
  with others (depending upon position). On other than the H&R  
manager made 50k dollar a year. A royal salary over there.

Over factor 10 that of the workers there.

They're having far more capable H&R over there than any H&R in this  
entire nation.


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