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Comment by vmception | Hacker News Reader

This doesn’t seem accurate, many newer physics theories are used heavily in finance.

I would say its mostly in communication.

People set up laser beam networks on rooftops to get faster pricing data.

The processors and hardware are all pushing for faster reading and trading, with continual research at the physical level.

Some formulas still go into financial models or back into physics.

Just like the article started off its examples with.

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The uses of advanced laser networking kit is to to gain an advantage in front-running.

Which is to say, to get your brokerage's orders in ahead of a large institutional order.

IOW: Legally-sanitised insider trading.

I don’t care.

Maybe informative for others.

My actual opinion on that is that you used to have to go to the square where people were exchanging. People farther distances away simply were not there and had to wait in the newspaper to know what happened with prices. I don’t consider advances in communication to be controversial in that regard. I do think people should be aware of who sees their communications.

The problem is that you need an increasing amount of capital to trade. It raises the barrier to entry.

Thats not true at all

Why is that? You have to own some laser networking kit in a line-of-sight to play along. That costs money.

Not 'to trade' but to enter the small world of HFT. Many, many industries have capital barriers to entry, I don't really see the big deal. Just as I cannot start an HFT firm, I also cannot start a toy factory or restaurant without sufficient capital. If you actually look at how much money HFT firms earn relative to the finance sector as a whole, they're pretty small fish. They just pay a lot because they have relatively few staff.

The dogy bit is knowing that a large institutional order is coming.

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