Diamond Author
Perhaps, you thought it was rather insane to learn that 80% of the US stock market volume on some days has been that of high-frequency computer trading. That is to say Artificial Intelligent systems running batches of various algorithms holding trades no longer than a mere 8-11 seconds maximum, where anything over 5-seconds is considered "going long" or something like that? This is what caused the flash crash, and yes, your favorite big banks and mine, those we bailed out are all in with these computer servers sitting on top of Internet Hub routing networks.
Well guess what. The game continues, both in stocks and in currency trading too. Right now according to an article in the Wall Street Journal entitled; "Forex Market Nears $4 Trillion in Daily Trading," on July 27, 2010 by Katie Martin and Brandley Davis - the market has blossomed due to the hedging exposures of companies on either side of the pond hedging against Euro fluctuations against other currencies.
Indeed, corporations from the US which do a lot of business in Europe are setting themselves up to take advantage of the regains in the Euro against the dollar, as they sell to that market, while European companies obviously realize that their advantage previously is evaporating by the day. My question is what about all those other massive speculative trades and arbitrage routines, and the AI computers taking advantages of balancing issues second-by-second?
Do you realize they could crash the world's currencies in a heartbeat? Would the system back those trades out like the major stock markets did on that fatal Flash Crash Day, remember that all happened in less than 20-minutes and remember these computer systems learn from their mistakes. It is doubtful they'd turn them off this time, rather go with it, whichever way the crash comes or goes?
So, I ask, is this intensive volume due to readjustment triggers due to the Euro back up to $1.30 on the dollar, or is there much more to this story? I just bet there is, but with that said, it's the computers who will win this war, not the humans, so, beware if you are a private individual who thinks they are going to get rich on little currency trades. You might just get your rear end handed to you one afternoon, and you will be 'game over' before you even know what hit you, and everyone else in that game. Think on this.
About this Author
Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank. Lance Winslow believes it's hard to write 20,000 articles; http://www.bloggingcontent.net/
Article Source: http://EzineArticles.com/?expert=Lance_Winslow
