Description: This is
a VOA Special English Economics Report.
See text below
Text:
Once, stocks were traded through the open outcry
system. Today fast, interconnected computers have
mostly replaced the traders shouting prices on the
floors of stock exchanges. Joe Saluzzi is a head of
equity trading at Themis Trading in New Jersey. "The
equity market has changed. It's no longer what you
see on TV, it's no longer guys with colored jackets
running around the floor anymore. .... The equity
market is a bunch of co-located computers strung
together by a bunch of wires, everyone trying to
race to zero. The speed of light is the
goal."Computers can process stock trades in
thousandths of a second. Andrew Haines of Gain
Capital is an online broker. "A millisecond can mean
millions of dollars to the success of your strategy.
Having a one, two, three millisecond advantage over
other traders may mean that you get into a trade at
a preferable price." Andrew Haines says an estimated
seventy percent of all stock trades are
high-frequency trades made with complex computer
models. Stocks may be held for only seconds. But
fast trades are also blamed for big moves in stock
prices.On May sixth, two thousand ten, a leading
measure of American stocks briefly fell about nine
percent. The Dow Jones Industrial Average then
recovered much of those losses by the end of trading
that day. The Securities and Exchange Commission
ordered steps to prevent future "flash crashes" like
that one. Joel Hasbrouck of New York University says
those steps are working. "They're called
circuit-breakers, and basically what they mean is
that when a stock has moved by a large amount in a
short period of time, there's a trading halt."Joe
Saluzzi of Themis Trading says the main problem with
high-speed trading is an unbalanced market. "The
stock market used to be a predictor of the future
economy. Now I think the stock market is a backwards
predictor. ... It's forecasting the next microsecond
move. It's not forecasting the next six months,
because most of the volume is being dominated by
guys who could care less what goes on in six months.
So, how could you think the price is being set
correctly?" But Joel Hasbrouck says high-speed
trading can reduce sharp rises or drops in stock
prices. "In normal circumstances, high-frequency
traders act as market-makers. That means they stand
by passively waiting to buy or sell from whoever
comes into the market needing to trade. In that
capacity, they actually help stabilize the market."
For VOA Special English, I'm Alex Villarreal.
Hi. I
personally reviewed this video and found it appropriate for
the news section of English Global Group. This
is a Voice of America video which covers an interesting
topic in Special English. I would appreciate some feedback from both
students and teachers about this video. You can comment in
the window below using any of a number of different services
including Facebook, Yahoo, AOL, and Hotmail.
To post a comment:
• Click "Comment using..." in
the window below
• Click your favorite service: Facebook, Yahoo, AOL, Hotmail
• Login to the service
• Click "Add a comment..."
• Post your comment in the window
Students: Please post a
comment stating what you found interesting about this video. You are
welcome to include links to your English study blogs and any
other materials you think might be useful for learning
English.
Teachers: Please post your
thoughts about this video. You are welcome to include links to
your sites, blogs, and any other materials you think might
be useful for learning English.
Hi. I
personally reviewed this video and found it appropriate for
the news section of English Global Group. This
is a Voice of America video which covers an interesting
topic in Special English. I would appreciate some feedback from both
students and teachers about this video. You can comment in
the window below using any of a number of different services
including Facebook, Yahoo, AOL, and Hotmail.
